<PAGE>
Defined
Asset FundsSM
<TABLE>
<S> <C>
International This Fund is a defined portfolio of preselected securities, formed
Bond Fund for the purpose of providing current income and the
possibility of capital appreciation through investment in a fixed
portfolio of interest bearing debt obligations payable in Canadian
and Australian dollars. A decision to invest in Units of the Fund
should be made only with a complete understanding of the currency
exchange risk associated with an investment in foreign currency
denominated Securities. Changes in the exchange rates of Canadian or
Australian dollars relative to the United States dollar will affect
the United
- ---------------------------------------- States dollar value of the Fund's assets and the current and long
term returns, and therefore the value of the Units.
MULTI-CURRENCY
SERIES-28 The Estimated Current and Long Term Returns, assuming no changes in
(CANADIAN AND AUSTRALIAN currency exchange rates, are set forth on page A-3. A decrease in
DOLLAR BONDS) the value of Canadian or Australian dollars relative to the United
A UNIT INVESTMENT TRUST States dollar will result in a decrease in the Estimated Current and
Long Term Returns and in the value of the Units, and an increase in
the value of Canadian or Australian dollars relative to the United
States dollar will result in an increase in the Estimated Current
and Long Term Returns and
m POTENTIAL CAPITAL the value of the Units. A portion of the returns of the Fund,
APPRECIATION therefore, should be considered speculative. Because of this
m MONTHLY INCOME currency exchange risk, as well as the potential for interest rate
and other fluctuations that would affect the value of Se-
m CONVENIENT FOREIGN curities, no assurance can be given that an investor's actual re-
CURRENCY INVESTMENT turns will not decrease or that Units of the Fund will not
depreciate in value. Estimated cash flows for the Fund are set forth
in the Prospectus.
U.S. TAX-EXEMPT FOR
FOREIGN INVESTORS WHEN Unless otherwise indicated, all amounts herein are stated in U.S.
CERTAIN CONDITIONS ARE MET dollars computed on the basis of the exchange rate for the relevant
currencies on July 7, 1994.
Minimum purchase: 1 Unit.
</TABLE>
<TABLE>
<S> <C>
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE COMMISSION OR ANY STATE SECURITIES
SPONSORS: COMMISSION PASSED UPON THE ACCURACY OR ADE-
Merrill Lynch, Pierce, Fenner & QUACY OF THIS PROSPECTUS. ANY REPRESENTATION
Smith Inc. TO THE CONTRARY IS A CRIMINAL OFFENSE.
Smith Barney Inc. Inquiries should be directed to the Trustee at
PaineWebber Incorporated 1-800-323-1508.
Prudential Securities Incorporated Prospectus dated July 8, 1994.
Dean Witter Reynolds Inc. Read and retain this Prospectus for future reference.
</TABLE>
<PAGE>
<PAGE>
Defined Asset FundsSM is America's oldest and largest family of unit investment
trusts, with over $90 billion sponsored since 1970. Each Defined Fund is a
portfolio of preselected securities. The portfolio is divided into 'units'
representing equal shares of the underlying assets. Each unit receives an equal
share of income and principal distributions.
With Defined Asset Funds you know in advance what you are investing in and that
changes in the portfolio are limited. Most defined bond funds pay interest
monthly and repay principal as bonds are called, redeemed, sold or as they
mature. Defined equity funds offer preselected stock portfolios with defined
termination dates.
Your financial advisor can help you select a Defined Fund to meet your personal
investment objectives. Our size and market presence enable us to offer a wide
variety of investments. Defined Funds are available in the following types of
securities: municipal bonds, corporate bonds, government bonds, utility stocks,
growth stocks, even international securities denominated in foreign currencies.
Termination dates are as short as one year or as long as 30 years. Special funds
are available for investors seeking extra advantages: insured funds, double and
triple tax-free funds, and funds with 'laddered maturities' to help protect
against changing interest rates. Defined Funds are offered by prospectus only.
- ------------------------------------------------------------------------------
Contents
<TABLE>
<S> <C>
Investment Summary..................................... A-3
Fee Table.............................................. A-6
Underwriting Account................................... A-8
Report of Independent Accountants...................... A-9
Statement of Condition................................. A-9
Portfolio.............................................. A-10
Estimated Cash Flow to Holders......................... A-11
Fund Structure......................................... 1
Risk Factors........................................... 2
Description of the Fund................................ 5
Taxes.................................................. 9
Public Sale of Units................................... 12
Market for Units....................................... 15
Redemption............................................. 15
Expenses and Charges................................... 17
Administration of the Fund............................. 17
Resignation, Removal and Limitations on Liability...... 20
Miscellaneous.......................................... 22
Description of Ratings................................. 24
Exchange Option........................................ 25
</TABLE>
A-2
<PAGE>
<PAGE>
INVESTMENT SUMMARY AS OF JULY 7, 1994 (THE BUSINESS DAY PRIOR TO THE INITIAL
DATE OF DEPOSIT)( A )
<TABLE>
<S> <C>
ESTIMATED CURRENT RETURN( B )
(based on Public Offering Price) 7.20%( C )
ESTIMATED LONG TERM RETURN( B )
(based on Public Offering Price) 8.52%( C )
PUBLIC OFFERING PRICE PER UNIT
(including 3.25% sales charge) $ 956.41( D )
INITIAL U.S. DOLLAR FACE AMOUNT
OF SECURITIES-- $ 4,961,085
INITIAL NUMBER OF UNITS-- 4,961
SPONSORS' REPURCHASE PRICE AND
REDEMPTION PRICE PER UNIT( E )
(based on bid side evaluation) $ 919.82( D )
FRACTIONAL UNDIVIDED INTEREST IN
FUND REPRESENTED BY EACH UNIT-- 1/4,961TH
CALCULATION OF PUBLIC OFFERING
PRICE
Aggregate offering side
evaluation of Securities in
Fund....................... $ 4,590,546.59
--------------
Divided by 4,961 Units........ $ 925.33
Plus sales charge of 3.25% of
Public Offering Price
(3.359% of net amount
invested in
Securities)( F )........... 31.08
--------------
Public Offering Price per
Unit....................... $ 956.41
Plus accrued interest( G ).... 1.33
--------------
Total...................... $ 957.74
--------------
--------------
</TABLE>
<TABLE>
<S> <C>
CALCULATION OF ESTIMATED NET ANNUAL
U.S. DOLLAR INTEREST RATE PER UNIT( C )
(based on initial U.S. dollar face
amount of $1,000 per Unit)
Annual U.S. dollar interest rate per
Unit............................. 7.203%
Less estimated annual expenses per
Unit ($3.13) expressed as a
percentage( H ).................. .313%
---------
Estimated net annual U.S. dollar
interest rate per Unit--......... 6.890%
---------
---------
</TABLE>
<TABLE>
<S> <C>
DAILY RATE AT WHICH ESTIMATED ANNUAL
U.S. DOLLAR NET INTEREST ACCRUES PER
UNIT( C ).............................. .0191%
MONTHLY INCOME DISTRIBUTIONS
Distributions of income, if any, will be made on
the 25th day of each month to holders of record
on the 10th day of each month, commencing
January, 1995.
REDEMPTION PRICE PER UNIT LESS THAN:
Public Offering Price by......... $ 36.59
Sponsors' Initial Repurchase
Price by......................... $ 5.51
RECORD DAY--The 10th day of each month
DISTRIBUTION DAY--The 25th day of each month
CAPITAL DISTRIBUTION
No distribution need be made from Capital Account
if balance is less than $5.00 per Unit
SPONSORS' PROFIT ON DEPOSIT............ $ 14,118.75
TRUSTEE'S ANNUAL FEE AND EXPENSES( I )
$3.13 per Unit (see Expenses and Charges)
PORTFOLIO SUPERVISION FEE( J )
Maximum of $0.35 per $1,000 face amount of
underlying Debt Obligations (see Expenses and
Charges)
EVALUATOR'S FEE FOR EACH EVALUATION
Minimum of $45.00 (see Expenses and Charges)
EVALUATION TIME
3:30 P.M. New York Time
</TABLE>
<TABLE>
<S> <C> <C>
PREMIUM AND DISCOUNT ISSUES IN PORTFOLIO
Initial U.S. dollar face amount of Securities
with offer side evaluation:
at a discount from
par-- 100%
MANDATORY TERMINATION DATE
Trust must be terminated no later than one year
after the maturity date of the last maturing
Debt Obligation listed under Portfolio (see
Portfolio)
MINIMUM VALUE OF FUND
Trust may be terminated if value of Fund is less
than 40% of U.S. dollar face amount of
Securities in the Portfolio on the date of
their deposit.
</TABLE>
- ------------
( a ) The Indenture was signed and the deposit was made on the date of this
Prospectus.
( b ) Estimated Current Return represents annual interest income after
estimated expenses divided by the maximum public offering price including
maximum 3.25% sales charge. Estimated Long Term Return is the net annual
percentage based on the yield on each underlying Debt Obligation weighted to
reflect market value and time to maturity or earlier call date and is adjusted
for estimated expenses and the maximum offering price but not for delays in the
Fund's distribution of income. Estimated Current Return shows current annual
cash return to investors, while Estimated long term return shows the return on
Units held to maturity, reflecting maturities, discounts and premiums on
underlying Debt Obligations. Both figures will vary with purchase price
including sales charge and changes in currency exchange rates and Fund income
after expenses and the redemption, sale or other disposition of Debt Obligations
in the Portfolio. The fact that these figures may be higher than the return for
comparable securities denominated in United States dollars is, in part,
reflective of the risk that the value of Canadian or Australian dollars may
decrease relative to the U.S. dollar. (See Risk Factors; Currency Exchange Risk
on page A-4.) In addition, the Securities in this Fund pay interest annually or
semi-annually, and as a result distributions of income on units are generally
subject to certain delays; if the Estimated Long Term Return figure shown above
took these delays into account, it would be lower.
( c ) Based on current exchange rates for Canadian and Australian dollars on
the date of the Investment Summary. Any weakening of the Canadian or Australian
dollar will affect the returns adversely.
( d ) Plus accrued interest.
( e ) During the initial offering period, the Fund's Sponsors intend to offer
to purchase Units at prices based on the offer side value of the underlying
Securities. Thereafter, the Sponsors intend to maintain such a market based on
the bid side value of the underlying Securities which will be equal to the
Redemption Price. (See Market for Units.)
( f ) The sales charge during the initial offering period and in the secondary
market will be reduced on a graduated scale in the case of purchases of 250 or
more Units (see Public Sale of Units--Public Offering Price). The resulting
reduction in the Public Offering Price will increase the return on a Unit.
( g ) Figure shown represents interest accrued on underlying Securities from
the Initial Date of Deposit to expected date of settlement (normally five
business days after purchase) assuming Units were purchased on the date of the
Investment Summary (see Description of the Fund--Income; Estimated Long Term
Return).
( h ) Assumes the Fund will reach a size estimated by the Sponsors; expenses
will vary with the size of the Fund relative to this estimate.
( i ) Of this amount the Trustee receives annually for its services as Trustee
$1.50 per $1,000 U.S. face amount of Securities, calculated monthly based on the
highest face amount outstanding at any time during that month, based on the
relevant exchange rates in effect on the Initial Date of Deposit. The Trustee's
Annual Fee and Expenses also includes the Sponsors' Portfolio Supervision Fee
set forth herein.
( j ) In addition to this amount, the Sponsors may be reimbursed for
bookkeeping or other administrative expenses not exceeding their actual costs,
currently at an annual maximum of $.10 per Unit.
A-3
<PAGE>
<PAGE>
INVESTMENT SUMMARY AS OF JULY 7, 1994 (CONTINUED)
OBJECTIVE OF THE FUND--To provide current income and the possibility of
capital appreciation through investment in a fixed portfolio of interest bearing
debt obligations payable in Canadian and Australian dollars. There is no
assurance that this objective will be met because it is subject to (i)
fluctuations in the relevant foreign exchange rates, which will affect the U.S.
dollar value of the Securities and payments of principal of and interest on the
Securities and therefore the value of the Units, (ii) the continuing ability of
issuers of the Securities held by the Fund to meet their principal and interest
obligations and (iii) yield and possible currency appreciation of the remaining
bonds after maturity, sale or other disposition of other bonds in the portfolio.
The market value in U.S. dollars of the underlying Securities, and therefore the
value of the Units, will fluctuate with changes in interest rates and in foreign
exchange rates and other factors. Moreover, since the Portfolio consists
primarily of securities of foreign issuers, an investment in the Fund involves
investment risks that are different in some respects from those attending an
investment in a fund which invests in securities of United States domestic
issuers (see Risk Factors).
PORTFOLIO AT A GLANCE--
DIVERSIFICATION--The Portfolio includes obligations of 13 issuers. The
issuers (or their guarantors) may be grouped by country of organization or
principal place of business as follows: 1 in Canada, 6 in Australia, 1 in
France, 1 in Norway, 1 in Germany, 1 in Denmark, 1 in Finland, and 1 in
Netherlands.
INVESTMENT QUALITY--All the Debt Obligations in the Portfolio have, in the
opinion of the Agent for the Sponsors, credit characteristics comparable to
securities which are rated in the category AA or better by Standard & Poor's,
Moody's or Fitch or which, if not rated, are issued by issuers whose outstanding
debt obligations generally are rated AA or better by Standard & Poor's, Moody's
or Fitch (see Description of the Fund--The Portfolio).
MATURITIES--The issues have maturity dates ranging from 1998 to 1999.
CALL PROTECTION--None of the obligations in the Portfolio is subject to
optional refunding redemptions or sinking fund provisions prior to maturity.
DEBT OBLIGATIONS--The Portfolio is comprised of 13 different issues of debt
obligations, having no conversion or equity features, and issued by 13 different
issuers of which 7 are banks or other financial institutions and 6 are foreign
governmental entities. Based on current exchange rates, approximately 50% of the
Debt Obligations are denominated in Canadian dollars and 50% in Australian
dollars. (See Risk Factors.)
The Sponsors may deposit additional Securities in the Fund (where additional
Units are to be offered to the public) subsequent to the Initial Date of Deposit
(see Fund Structure).
RISK FACTORS; CURRENCY EXCHANGE RISK--All of the Securities in the Portfolio
are denominated in Canadian and Australian dollars, which in the past have
fluctuated widely in value against the U.S. dollar for many reasons, including
supply and demand of each currency, the impact of interest rate differentials
between different currencies on the movement of foreign currency rates, the
soundness of the world economy, the rate of inflation in Canada and Australia
compared to that of the United States and the strength of the economies of
Canada and Australia as compared to the economies of the United States and other
countries. The Portfolio consists primarily of publicly held Securities which,
in many cases, do not have the benefit of covenants which would prevent the
issuer from engaging in capital restructurings or borrowing transactions in
connection with corporate acquisitions, leveraged buyouts or restructurings
which could have the effect of reducing the ability of the issuer to meet its
debt obligations and might result in the ratings of the Securities and the value
of the underlying Portfolio being reduced. (See Risk Factors for a brief summary
of certain investment risks pertaining to the obligations held by the Fund.)
OTHER RISK FACTORS--100% of the aggregate face amount of the Portfolio,
based on current exchange rates, have been issued by non-U.S. obligors;
aproximately 47% of the aggregate face amount of the Portfolio, based on current
exchange rates, consist of obligations of foreign governmental entities, and
approximately 53% of the Debt Obligations in the Portfolio consist of
obligations of banks or other financial institutions.* Issues of foreign
obligors may involve investment risks that are different from those of domestic
issues, including future political and economic developments, the possible
imposition of withholding taxes and exchange controls or other foreign
governmental restrictions which might adversely affect the payment of amounts
due on Securities in the Portfolio. In addition, it may be more difficult to
obtain and enforce a judgment against a foreign obligor, there may be less
publicly available information about a foreign obligor and foreign obligors are
not generally subject to uniform accounting, auditing and financial reporting
standards, practices and requirements comparable to those applicable to domestic
issuers. Foreign securities markets, while growing in volume, have, for the most
part, substantially less volume than U.S. markets, and securities of many
foreign companies are less liquid and their prices more volatile than securities
of comparable domestic companies. Fixed brokerage commissions and other
transaction costs on foreign securities exchanges are generally higher than in
the United States and there is generally less government supervision and
regluation of exchanges, brokers and issuers in foreign countries than there is
in the United States. (See Risk Factors--Foreign Issuers--Jurisdiction Over, and
U.S. Judgments Concerning, Foreign Obligors;--Banks, Bank Holding Companies and
Other Financial Institutions.)
- ---------------
* A Fund is considered to be 'concentrated' in a particular category when the
Securities in that category constitute 25% or more of the aggregate face
amount of the portfolio (see Risk Factors).
A-4
<PAGE>
<PAGE>
Defined
Asset Funds
Defined
International
Bond Funds
Investor's Guide
Our defined portfolios of international bonds offer
investors a simple and convenient way to participate in
foreign markets while earning an attractive return. And
by purchasing international bond funds, investors not
only avoid the difficulties of selecting securities by
themselves, but also gain the advantage of reduced risk
by investing in securities of several different issuers.
International
Bond Fund Attractive return
With this fund, investors can participate in the
relatively higher interest rates available on bonds
denominated in Canadian and Australian dollars. Because
all the debt obligations in the portfolio are so
denominated, investors should be aware that the same
- -------------------- economic forces that lead to high interest rates may also
contribute to falling currency exchange rates for
Canadian and Australian
MULTI-CURRENCY dollars. Depreciation of the relevant currencies in
SERIES-28 relation to the United States dollar over the life of the
(CANADIAN AND fund would result in investors receiving lower rates of
AUSTRALIAN DOLLARS) return on their purchase price than is indicated in the
prospectus and would also reduce the U.S. dollar value of
principal distributions and liquidation proceeds.
Monthly distributions
The fund will make monthly distributions of net interest
income to investors. These payments will be made in U.S.
dollars based on the then-current U.S. dollar exchange
rates for Canadian and Australian dollars and will vary
periodically to reflect changes in rates.
Professional selection and supervision
The fund contains a variety of bonds selected by
experienced buyers and market analysts. Spreading your
investment among different securities and issuers reduces
your risk, but does not eliminate it. The fund is not
actively managed. However, the portfolio is regularly
reviewed. The Sponsors can sell a security if we believe
retaining it would be detrimental to investors' interest.
A liquid investment
Although not legally required to do so, we have
maintained a secondary market for our funds for over 20
years. You can cash in your units to the Sponsors at any
time. Your price is based on the market value of the
fund's securities at that time as determined by an
independent evaluator. Or, you can exchange your
investment for another Defined Asset Fund at a reduced
sales charge.
Reinvestment option
You can elect to automatically reinvest your monthly
interest payments and/or any principal payments in a
separate fund that consists of U.S. dollar denominated
corporate bonds. Reinvesting helps to compound your
income. Interest distributions from this reinvestment
program to foreign holders will be subject to U.S.
federal income taxes including withholding taxes.
Principal distributions
Principal from sales, redemptions and maturities of bonds
in the fund is distributed to investors periodically.
Risk Factors
Unit price fluctuates and is affected by interest rates
as well as the financial condition of the issuers of the
bonds.
This page may not be distributed unless included in a current prospectus.
Investors should refer to the prospectus for further information.
<PAGE>
<PAGE>
INVESTMENT SUMMARY AS OF JULY 7, 1994 (CONTINUED)
The following table sets forth recent annual ranges and end-of-month United
States dollar exchange rates for the Canadian and Australian dollar.
Fluctuations of the rates that have occurred in the past are not necessarily
indicative of fluctuations that may occur over the term of the Fund:
<TABLE>
<CAPTION>
END-OF-MONTH
ANNUAL RANGE OF U.S. DOLLAR U.S. DOLLAR
EXCHANGE RATES EXCHANGE RATES
<C> <C> <C> <S> <C> <C>
- ------------------------------------- ---------------------------
<CAPTION>
U.S.$/CAN$ U.S.$/AUS$ U.S.$/CAN$ U.S.$/AUS$
<C> <C> <C> <S> <C> <C>
------------ -------------- ------------ ------------
1994:
1984 .805 - .749 .967 - .819
January .709 - .679 .763 - .752
1985 .759 - .713 .826 - .631
February .753 - .739 .726 - .708
1986 .732 - .694 .745 - .596
March .740 - .723 .718 - .700
1987 .772 - .724 .737 - .645
April .728 - .717 .727 - .704
1988 .843 - .770 .880 - .703
May .728 - .721 .738 - .704
1989 .864 - .826 .892 - .741
June .729 - .719 .747 - .723
1990 .881 - .829 .834 - .745
1991 .893 - .859 .802 - .751
1992 .876 - .777 .770 - .682
1993 .805 - .744 .772 - .642
</TABLE>
- ---------------
Source: Datastream International, Inc.
A weakening of Canadian or Australian dollars relative to the United States
dollar will reduce the United States dollar value of payments of interest on the
Securities with the effect of reducing the returns on the Units. If the
reduction of the United States dollar value of principal payments resulting from
a devaluation were also taken into account by amortization of principal loss
over the life of a Security, there would be a further significant decline in the
returns. These adverse consequences would be more pronounced for fixed-rate debt
obligations with short intermediate maturities, which the Portfolio contains,
than for fixed-rate debt obligations with long-term maturities. The following
table shows the average returns on investment (without regard to sales charge)
in fixed-rate debt obligations with various coupons and maturities after giving
effect to (i) a reduction of the U.S. dollar value of interest payments
resulting from a devaluation prior to the first interest payment date and (ii)
amortization of the related principal loss over the life of the obligation. The
devaluation assumptions below are consistent with recent fluctuations of
Canadian and Australian dollars relative to the United States dollar:
AVERAGE RETURNS ON INVESTMENT ASSUMING CURRENCY DEVALUATION
<TABLE>
<CAPTION>
DEVALUATION IN
RELATION TO AVERAGE RETURNS ON INVESTMENT FOR
U.S. DOLLAR DEBT OBLIGATIONS ASSUMING DEVALUATION
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
--------------- -----------------------
<CAPTION>
7% COUPON 8% COUPON 9% COUPON
1 YR 3 YR 5 YR 1 YR 3 YR 5 YR 1 YR 3 YR 5 YR
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5% 1.65% 4.98% 5.65% 2.60% 5.93% 6.60% 3.55% 6.88% 7.55%
10% -3.70 2.97 4.30 -2.80 3.87 5.20 -1.90 4.77 6.10
15% -9.05 0.95 2.95 -8.20 1.80 3.80 -7.35 2.65 4.65
</TABLE>
To illustrate the effect of a significant decline in the value of the
Canadian or Australian dollar relative to the United States dollar, assume that
the estimated return on the Initial Date of Deposit for a three year trust with
a portfolio of securities denominated in Canadian and Australian dollars is 9%,
that a Holder purchases 1 Unit on the Initial Date of Deposit at a price of
$1,000 per Unit, the value of the Canadian or Australian dollar declines by 15%
relative to the United States dollar on the day following the Initital Date of
Deposit, the Holder holds his Units for three years and the Fund is terminated
exactly three years from the Initial Date of Deposit. Following the termination
of the Fund, the Holder will receive a principal payment of $850 representing
the amount of his original investment ($1,000) less the $150 loss related to the
decline in the value of the Canadian or Australian dollar. In addition, the
Holder will receive monthly interest payments totaling $229.50 representing the
estimated return on his investment ($270.00) less the $40.50 loss related to the
decline in the value of Canadian or Australian dollar.
A-5
<PAGE>
<PAGE>
DEFINED ASSET FUNDS--INTERNATIONAL BOND FUND
MULTI-CURRENCY SERIES-28
I want to learn more about automatic reinvestment in the
Investment Accumulation Program. Please send me information
about participation in the Corporate Fund Accumulation
Program, Inc. and a current Prospectus.
My name (please print) _____________________________________
My address (please print):
Street and Apt. No. __________________________________
City, State, Zip Code ______________________________________
This page is a self-mailer. Please complete the information
above, cut along the dotted line, fold along the lines on
the reverse side, tape, and mail with the
Trustee's address displayed on the outside.
1 2 3 4 5 6 7 8
<PAGE>
<PAGE>
<TABLE>
<S> <C>
NO POSTAGE
NECESSARY
IF MAILED
IN THE
UNITED STATES
BUSINESS REPLY MAIL
FIRST CLASS PERMIT NO. 644 NEW YORK, NY
POSTAGE WILL BE PAID BY ADDRESSEE
THE CHASE MANHATTAN BANK, N.A.
UNIT TRUST DEPARTMENT
BOX 2051
NEW YORK, NEW YORK 10081
</TABLE>
- --------------------------------------------------------------------------------
(Fold along this line.)
- --------------------------------------------------------------------------------
(Fold along this line.)
<PAGE>
<PAGE>
INVESTMENT SUMMARY AS OF JULY 7, 1994 (CONTINUED)
FEE TABLE
THIS FEE TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE COSTS
AND EXPENSES THAT AN INVESTOR IN THE FUND WILL BEAR DIRECTLY OR INDIRECTLY. SEE
PUBLIC SALE OF UNITS AND EXPENSES AND CHARGES. ALTHOUGH THE FUND IS A UNIT
INVESTMENT TRUST RATHER THAN A MUTUAL FUND, THIS INFORMATION IS PRESENTED TO
PERMIT A COMPARISON OF FEES.
<TABLE>
<S> <C>
UNITHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases during the Initial Offering Period (as a percentage
of Public Offering Price).................................................................... 3.25%
Maximum Sales Charge Imposed on Purchases during the Secondary Offering Period (as a
percentage of Public Offering Price)......................................................... 3.75%
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS1)
Trustee's Fee................................................................................... .162%
Portfolio Supervision, Bookkeeping and Administrative Fees...................................... .047%
Other Operating Expenses........................................................................ .130%
------
Total...................................................................................... .339%
------
------
</TABLE>
- ---------------
1 Based on the mean of the bid and the offer side evaluations; this figure may
differ from that set forth as estimated annual expenses per unit expressed as a
percentage on page A-3.
<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE CUMULATIVE EXPENSES PAID FOR PERIOD OF:
1 YEAR 2 YEARS 3 YEARS 4 YEARS
-------- -------- -------- ---------
An investor would pay the following expenses on a $1,000
investment, assuming the Fund's estimated operating expense
ratio of .339% and a 5% annual return on the investment
throughout the periods....................................... $36 $39 $43 $47
</TABLE>
The Example assumes reinvestment of all distributions into additional Units
of the Fund (a reinvestment option different from that offered by this Fund--see
Administration of the Fund--Investment Accumulation Program) and utilizes a 5%
annual rate of return as mandated by Securities and Exchange Commission
regulations applicable to mutual funds. In addition to the charges described
above, a Holder selling or redeeming his Units in the secondary market (before
the Fund terminates) will receive a price based on the then-current bid side
evaluation of the underlying securities. The difference between this bid side
evaluation and the offer side evaluation (the basis for the Public Offering
Price), as of the day before the Initial Date of Deposit, is $5.51 per Unit. Of
course, this difference may change over time. The Example should not be
considered a representation of past or future expenses or annual rate of return;
the actual expenses and annual rate of return may be more or less than those
assumed for purposes of the Example.
<PAGE>
<PAGE>
INVESTMENT SUMMARY AS OF JULY 7, 1994 (CONTINUED)
The Securities may not be listed on a securities exchange. Whether or not
the Securities are listed, the principal trading market for the Securities will
generally be in the over-the-counter market. As a result, the existence of a
liquid trading market for the Securities may depend on whether dealers will make
a market in the Securities. There can be no assurance that a market will be made
for any of the Securities, that any market for the Securities will be maintained
or of the liquidity of the Securities in any markets made. In addition, the Fund
may be restricted under the Investment Company Act of 1940 from selling
Securities to any Sponsor. The price at which the Securities may be sold to meet
redemptions and the value of the Fund will be adversely affected if trading
markets for the Securities are limited or absent. (See Risk Factors--Liquidity.)
PUBLIC OFFERING PRICE--During the initial offering period and any offering
of additional Units the Public Offering Price of the Units is based on the
aggregate offering side evaluation of the underlying Securities (the price at
which they could be directly purchased by the public assuming they were
available) converted into U.S. dollars at the current exchange rates, divided by
the number of Units outstanding, plus a sales charge of 3.359%* of the offering
side evaluation per Unit (the net amount invested); this results in a sales
charge of 3.25%* of the Public Offering Price. The secondary market Public
Offering Price is based on the bid side evaluation of the underlying Securities
(converted into U.S. dollars at the current exchange rates) plus a sales charge
of 3.896%* of the bid side evaluation per Unit; this results in a sales charge
of 3.75%* of the secondary market Public Offering Price. Units are offered at
the Public Offering Price computed as of the Evaluation Time for all sales made
subsequent to the previous evaluation plus cash per Unit in the Capital Account
not allocated to the purchase of specific Securities and net interest accrued.
The Public Offering Price on the Initial Date of Deposit, and on subsequent
dates, will vary from the Public Offering Price set forth on page A-3. (See
Public Sale of Units--Public Offering Price and Redemption.)
ESTIMATED CURRENT RETURN; ESTIMATED LONG TERM RETURN--Estimated Current
Return on a Unit shows the return based on the Public Offering Price and the
maximum applicable sales charge of 3.25%* and is computed by multiplying the
estimated net annual interest rate per Unit (which shows the return per Unit
based on $1,000 face amount) by $1,000 and dividing the result by the Public
Offering Price per Unit (not including accrued interest). Estimated Long Term
Return on a Unit of the Fund shows a net annual long-term return to investors
holding to maturity based on the yield on the individual Debt Obligations in the
Portfolio weighted to reflect the time to maturity (or in certain cases to an
earlier call date) and market value of each Debt Obligation in the Portfolio,
adjusted to reflect the Public Offering Price (including the maximum applicable
sales charge of 3.25%*) and estimated expenses. Unlike Estimated Current Return,
Estimated Long Term Return takes into account maturities of the underlying
Securities and discounts and premiums. The Securities of this Fund pay interest
annually or semi-annually, and as a result distributions of income on Units are
generally subject to certain delays. If the Estimated Long Term Return figure
shown on page A-3 took these delays into account, it would be lower. The net
annual U.S. dollar interest rate per Unit and the net annual long term return to
investors will vary on a daily basis with changes in the exchange rates for the
relevant currencies and with changes in the fees and expenses of the Trustee,
Sponsors and Evaluator and with the maturity, exchange, redemption, sale or
substitution of underlying Securities; the Public Offering Price will vary with
changes in the evaluation of the underlying Securities and with changes in the
exchange rates for the relevant currencies as well as with any reduction in
sales charges paid in the case of quantity purchases. Therefore, it can be
expected that the current return and long term return will fluctuate in the
future. (See Description of the Fund--Income; Estimated Current Return;
Estimated Long Term Return.)
- ---------------
* The sales charge during the initial offering period and in the secondary
market will be reduced on a graduated scale in the case of purchases of 250 or
more Units (see Public Sale of Units--Public Offering Price).
A-7
<PAGE>
<PAGE>
INVESTMENT SUMMARY AS OF JULY 7, 1994 (CONTINUED)
MONTHLY DISTRIBUTIONS--Monthly distributions in U.S. dollars of principal
and interest and redemption proceeds from the Fund will be made on the 25th day
of each month to holders of record of Units on the 10th day of that month
commencing with the first distribution on the date indicated on page A-3.
Distributions of interest income will be made based on estimates made on each
record date of the amount to be distributed, converted into U.S. dollars as of
the record date. Non-U.S. dollar amounts actually received by the Fund will be
converted by the Trustee into U.S. dollars upon receipt. Therefore, each
distribution will be adjusted to reflect any difference between the actual
amount received by the Fund in U.S. dollars and the amount previously
distributed to Holders. (See Administration of the Fund--Accounts and
Distributions.) Holders (other than non-U.S. residents) may elect to have
distributions automatically reinvested in The Corporate Fund Accumulation
Program, Inc. (which does not invest in international securities) by completing
the enclosed form (see Investment Accumulation Program).
TAXATION--In the opinion of special counsel to the Sponsors, each Holder
will be considered to have received the interest on his pro rata portion of each
Debt Obligation when interest on the Debt Obligation is received by the Fund.
Interest received by the Fund (measured for cash basis U.S. Holders in U.S.
dollars based on the exchange rate at the time of receipt by the Fund) is
taxable for U.S. Holders but exempt from U.S. Federal income taxes, including
withholding taxes, for many foreign Holders. (See Taxes.)
MARKET FOR UNITS--The Sponsors intend to maintain a secondary market for
Units based on the aggregate bid side evaluation of the underlying Securities
(see Market for Units). If this market is not maintained a Holder will be able
to dispose of his Units through redemption at prices also based on the aggregate
bid side evaluation of the underlying Securities (see Redemption). Market
conditions may cause the prices available in the market maintained by the
Sponsors or available upon exercise of redemption rights to be more or less than
the total amount paid for Units plus accrued interest.
PURCHASE, EXCHANGE AND TRANSFER OF UNITS--Units can be purchased by
contacting any of the Sponsors, whose addresses are listed on the back cover of
this Prospectus. The minimum purchase is one Unit. The purchaser may exchange
his Units for units of certain other unit investment trusts at a reduced sales
charge (see Exchange Option). The Trustee is deemed to be the transfer agent and
dividend paying agent.
PRIVATE PLACEMENT; UNDERWRITING--None of the Securities in the Portfolio has
been purchased in private placement transactions or on a when, as and if issued
basis. None of the Sponsors has participated as sole underwriter, managing
underwriter or member of an underwriting syndicate from which any of the
Securities in the Portfolio was acquired.
REPLACEMENT SECURITIES--The Indenture permits the deposit of Replacement
Securities under certain circumstances described under Administration of the
Fund-Portfolio Supervision. The Securities on the current list from which
Replacement Securities are to be selected are:
Shell Australia 7.25% due 5/13/98
Nordic Investment Bank 7.75% due 1/13/98
UNDERWRITING ACCOUNT
The names and addresses of the Underwriters and their several interests in
the Underwriting Account are:
<TABLE>
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated P.O. Box 9051, Princeton, N.J. 08543-9051 88.91%
Smith Barney Inc. Two World Trade Center, 101st Floor, New York, N.Y. 10048 2.02
PaineWebber Incorporated 1285 Avenue of the Americas, New York, N.Y. 10019 2.02
Prudential Securities Incorporated One Seaport Plaza--199 Water Street, New York, N.Y. 10292 5.03
Dean Witter Reynolds Inc. Two World Trade Center--59th Floor, New York, N.Y. 10048 2.02
------
100.00%
------
------
</TABLE>
A-8
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee, and Holders of International Bond Fund Multi-Currency
Series-28 (Canadian and Australian Dollar Bonds) Defined Asset Funds:
We have audited the accompanying statement of condition, including the
portfolio, of International Bond Fund Multi-Currency Series-28 (Candian and
Australian Dollar Bonds) Defined Asset Funds as of July 8, 1994. This financial
statement is the responsibility of the Trustee. Our responsibility is to express
an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. The deposit on July 8,
1994 of an irrevocable letter or letters of credit for the purchase of
securities, as described in the statement of condition, was confirmed to us by
The Chase Manhattan Bank, N.A., the Trustee. An audit also includes assessing
the accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of International Bond Fund
Multi-Currency Series-28 (Canadian and Australian Dollar Bonds) Defined Asset
Funds at July 8, 1994 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE
New York, N.Y.
July 8, 1994
INTERNATIONAL BOND FUND
MULTI-CURRENCY SERIES-28
(CANADIAN AND AUSTRALIAN DOLLAR BONDS)
DEFINED ASSET FUNDS
STATEMENT OF CONDITION AS OF THE INITIAL DATE OF DEPOSIT, JULY 8, 1994
<TABLE>
<S> <C> <C>
TRUST PROPERTY
Investment in Securities:
Contracts to purchase Securities(1)............... $ 4,590,546.59
Accrued interest to Initial Date of Deposit on underlying
Securities(2) 171,107.69
--------------
Total.......................................... $ 4,761,654.28
--------------
--------------
LIABILITY AND INTEREST OF HOLDERS
Liability--Accrued interest to Initial Date of Deposit on
underlying Securities(2)(3)................................. $ 171,107.69
Interest of Holders:
4,961 Units of fractional undivided interest
outstanding:
Cost to investors(4).............................. $ 4,744,734.47
Gross underwriting commissions(5)................. (154,187.88)
--------------
Net amount applicable to investors.......................... 4,590,546.59
--------------
Total.......................................... $ 4,761,654.28
--------------
--------------
</TABLE>
- ------------
(1) Aggregate cost to the Fund of the Securities listed under Portfolio is
determined by the Evaluator on the basis set forth under Public Sale of
Units--Public Offering Price. See also the column headed Cost of Securities
in U.S. Dollars under Portfolio. An irrevocable letter or letters of credit
in the amount of $4,752,908.55 has been deposited with the Trustee for the
purchase in connection with contracts of $4,576,427.84 aggregate purchase
price (based on exchange rates at the Evaluation Time on the day prior to
the Initial Date of Deposit) of the Securities, together with accrued
interest thereon. The letter or letters of credit has been issued by Banca
Popolare di Milano, New York Branch.
(2) Based on the exchange rates at the Evaluation Time on the day prior to the
Initial Date of Deposit.
(3) Representing as set forth under Description of the Fund--Income; Estimated
Current Return; Estimated Long Term Return, a special distribution by the
Trustee of an amount equal to accrued interest on the Securities as of the
Initial Date of Deposit.
(4) Aggregate public offering price (exclusive of interest) computed on the
basis of the offering side evaluation of the underlying Securities as of the
Evaluation Time on the Business Day prior to the Initial Date of Deposit.
(5) Assumes sales charge of 3.25% on all Units computed on the basis set forth
under Public Sale of Units--Public Offering Price.
A-9
<PAGE>
<PAGE>
PORTFOLIO OF INTERNATIONAL BOND FUND, MULTI-CURRENCY SERIES-28
(CANADIAN AND AUSTRALIAN DOLLAR BONDS) DEFINED ASSET FUNDS
ON THE INITIAL DATE OF DEPOSIT, JULY 8, 1994
<TABLE>
<CAPTION>
YIELD TO
FOREIGN CURRENT COST OF MATURITY ON
PORTFOLIO NO. AND TITLE OF CURRENCY U.S. DOLLAR SECURITIES IN INITIAL DATE
SECURITIES CONTRACTED FOR FACE AMOUNT EQUIVALENT (1) COUPON MATURITIES U.S. DOLLARS (2) OF DEPOSIT (2)
<C> <S> <C> <C> <C> <C> <C> <C>
--------------- -------------- -------- ----------- ---------------- --------------
SECURITIES DENOMINATED IN THE
CANADIAN DOLLAR
1. Banque Nationale de Paris CAN$ 600,000 $ 432,292 7.500% 7/7/99 $ 405,814.30 9.081%
2. Bayerische Vereinsbank 500,000 360,244 7.125 7/29/99 333,945.72 8.985
3. Caisse Centrale des Jardins du 600,000 432,292 6.250 12/29/99 380,417.14 9.121
Quebec
4. Eksportfinans A/S 600,000 432,292 6.000 12/20/99 375,013.48 9.190
5. Finnish Export Credit 500,000 360,244 7.750 2/16/98 345,293.39 9.130
6. Kingdom of Denmark 500,000 360,244 6.500 10/29/99 321,517.32 9.137
7. Rabobank Nederland NV 150,000 108,073 7.250 3/31/98 102,939.57 8.873
--------------- -------------- ----------------
Total CAN$ 3,450,000 $ 2,485,681 $ 2,264,940.92
--------------- -------------- ----------------
--------------- -------------- ----------------
SECURITIES DENOMINATED IN THE
AUSTRALIAN DOLLAR
8. National Australia Bank AUS$ 700,000 $ 509,642 6.250% 3/29/99 $ 452,307.28 9.292%
9. Queensland Treasury Corporation 600,000 436,836 8.000 7/14/99 418,816.52 9.062
10. Rural and Industry Bank of 600,000 436,836 8.750 9/9/99 427,007.19 9.306
Western Australia
11. South Australia Government 500,000 364,030 6.250 2/25/99 326,716.93 9.047
Finance Authority
12. State Bank South Australia 400,000 291,224 6.500 1/21/99 267,198.02 8.770
13. State Electric Commission of 600,000 436,836 9.250 7/27/99 433,559.73 9.440
Victoria
--------------- -------------- ----------------
Total AUS$ 3,400,000 $ 2,475,404 $ 2,325,605.67
--------------- -------------- ----------------
--------------- -------------- ----------------
Grand Total $ 4,961,085 $ 4,590,546.59
-------------- ----------------
-------------- ----------------
</TABLE>
- ------------
NOTES
(1) Based on exchange rates for the relevant currencies on July 7, 1994.
(2) Evaluation of Securities by the Evaluator made on the basis of current
offering side evaluation. The offer side evaluation is greater than the
current bid side evaluation of the Securities, which is the basis on which
Redemption Price per Unit is determined (see Redemption). The aggregate
value based on the bid side evaluation at the Evaluation Time on the
business day prior to the Initial Date of Deposit was $4,563,229.27 which
is $27,317.32 (approximately 0.55% of the aggregate face amount) lower than
the aggregate Cost of Securities to Fund based on the offer side
evaluation. Yield to Maturity on Initial Date of Deposit was computed on
the basis of the offer side evaluation at the Evaluation Time on the
business day prior to Initial Date of Deposit, assuming no changes in
currency rates. Percentages in this column represent Yield to Maturity on
Initial Date of Deposit unless followed by '*' which indicates yield to an
earlier redemption date. (See Description of the Fund--Income; Estimated
Current Return; Estimated Long-Term Return for a description of the
computation of yield price.)
------------------------------------
All Debt Obligations are represented entirely by contracts to purchase such
Debt Obligations which were entered into by the Sponsors on July 7, 1994.
All contracts are expected to be settled by the initial settlement date for
purchase of Units.
A-10
<PAGE>
<PAGE>
INTERNATIONAL BOND FUND
MULTI-CURRENCY SERIES-28
(CANADIAN AND AUSTRALIAN DOLLAR BONDS)
DEFINED ASSET FUNDS
ESTIMATED CASH FLOW TO HOLDERS
The table below sets forth the per Unit estimated U.S. dollar monthly
distributions of principal and interest to Holders. The table assumes no changes
in expenses, no changes in currency exchange rates, no changes in current
interest rates and no exchanges, redemptions, sales or prepayments of the
underlying Securities prior to maturity and the receipt of principal upon
maturity and therefore actual distributions may vary. All fractions have been
rounded.
TABLE OF ESTIMATED CASH FLOW
<TABLE>
<CAPTION>
DATE AMOUNT
- ------------------------------- ------------
<S> <C>
January 1995 U.S. $ 6.42
February 1995-February 1998 5.74
March 1998 80.10
April 1998 27.55
May 1998-January 1999 5.14
February 1999 65.03
March 1999 79.63
April 1999 109.16
May 1999-June 1999 3.90
July 1999 93.08
August 1999 258.41
September 1999 92.11
October 1999 1.02
November 1999 75.10
December 1999 0.63
January 2000 178.22
</TABLE>
A-11
<PAGE>
<PAGE>
INTERNATIONAL BOND FUND
MULTI-CURRENCY SERIES
DEFINED ASSET FUNDS
FUND STRUCTURE
This Series (the 'Fund') is a 'unit investment trust' created under New
York law by a Trust Indenture (the 'Indenture') among the Sponsors, the Trustee
and the Evaluator. Unless otherwise indicated, when Investors Bank & Trust
Company and The First National Bank of Chicago act as Co-Trustees to the Fund,
reference to the Trustee in the Prospectus shall be deemed to refer to Investors
Bank & Trust Company and The First National Bank of Chicago, as Co-Trustees. To
the extent that references in this Prospectus are to articles and sections of
the Indenture, which are hereby incorporated by reference, the statements made
herein are qualified in their entirety by this reference. On the date of this
Prospectus (the 'Initial Date of Deposit') the Sponsors, acting as managers for
the underwriters named under Underwriting Account, deposited the underlying
Securities with the Trustee at a price equal to the evaluation of the Securities
in U.S. dollars on the offering side of the market on that date as determined by
the Evaluator, and the Trustee delivered to the Sponsors units of interest
('Units') representing the entire ownership of the Fund. Except as otherwise
indicated under Portfolio (the 'Portfolio'), the Securities so deposited were
represented by purchase contracts assigned to the Trustee together with an
irrevocable letter or letters of credit issued by a commercial bank or banks in
the amount and in the currencies necessary to complete the purchase thereof.
The Portfolio contains different issues of debt obligations with fixed
final maturity dates which are not payable in U.S. dollars. As used herein, the
term 'Debt Obligations' or 'Securities' means the debt obligations initially
deposited in the Fund and described under Portfolio and any replacement and
additional obligations acquired and held by the Fund pursuant to the provisions
of the Indenture (see Description of the Fund--The Portfolio; Administration of
the Fund--Portfolio Supervision).
With the deposit of the Securities in the Fund on the Initial Date of
Deposit, the Sponsors established a proportionate relationship among the face
amounts of Securities of specified interest rates and maturities in the
Portfolio. During the 90-day period following the Initial Date of Deposit, the
Sponsors may deposit additional Securities ('Additional Securities'), contracts
to purchase Additional Securities or cash (or a bank letter of credit in lieu of
cash) with instructions to purchase Additional Securities, in order to create
new Units, maintaining to the extent practicable the original proportionate
relationship among the face amounts of each Security in the Portfolio. It may
not be possible to maintain the exact original proportionate relationship among
the securities deposited on the Initial Date of Deposit because of, among other
reasons, purchase requirements, changes in prices, or unavailability of
Securities. Replacement Securities may be acquired under specified conditions
(see Description of the Fund--The Portfolio; Administration of the
Fund--Portfolio Supervision). Units may be continuously offered to the public by
means of this Prospectus (see Public Sale of Units--Public Distribution)
resulting in a potential increase in the number of Units outstanding. Deposits
of Additional Securities subsequent to the 90-day period following the Initial
Date of Deposit must replicate exactly the proportionate relationship among the
face amounts of Securities comprising the Portfolio at the end of the initial
90-day period subject to certain events as discussed under Administration of the
Fund--Portfolio Supervision.
Certain of the Securities in the Fund may have been valued at a market
discount. Securities trade at less than par value because the interest rates on
the Securities are lower than interest on comparable debt securities denominated
in a given currency being issued at currently prevailing interest rates. The
current returns of securities trading at a market discount are lower than the
current returns of comparably rated debt securities of a similar type issued at
currently prevailing interest rates because discount securities tend to increase
in market value as they approach maturity and the full principal amount becomes
payable. If currently prevailing interest rates for newly issued and otherwise
comparable securities increase, the market discount on previously issued
securities will become deeper and if currently prevailing interest rates for
newly issued comparable securities decline, the market discount of previously
issued securities will be reduced, other things being equal. Market discount
attributable to interest rate change does not indicate a lack of market
confidence in the issue.
Certain of the Securities in the Fund may have been valued at a market
premium. Securities trade at a premium because the interest rates on the
Securities are higher than interest on comparable debt securities denominated in
a given currency being issued at currently prevailing interest rates. The
current returns of securities trading at a market premium are higher than the
current returns of comparably rated debt securities of a similar type issued at
currently prevailing interest rates because premium securities tend to decrease
in market
1
<PAGE>
<PAGE>
value as they approach maturity when the face amount becomes payable. Because
part of the purchase price is thus returned not at maturity but through current
income payments, an early redemption of a premium security at par will result in
a reduction in yield. If currently prevailing interest rates for newly issued
and otherwise comparable securities increase, the market premium of previously
issued securities will decline and if currently prevailing interest rates for
newly issued comparable securities decline, the market premium of previously
issued securities will increase, other things being equal. Market premium
attributable to interest rate changes does not indicate market confidence in the
issue.
The holders ('Holders') of Units will have the right to have their Units
redeemed (see Redemption) at a price based on the aggregate bid side evaluation
in U.S. dollars of the Securities ('Redemption Price per Unit') if the Units
cannot be sold in the over-the-counter market which the Sponsors propose to
maintain at prices determined in the same manner (see Market for Units). On the
Initial Date of Deposit each Unit represented the fractional undivided interest
in the Securities and net income of the Fund set forth under the Investment
Summary, in the ratio of one Unit for each approximately $1,000 U.S. dollar
value of Securities initially deposited. Thereafter, if any Units are redeemed,
the face amount of Securities in the Fund will be reduced by amounts allocable
to redeemed Units, and the fractional undivided interest represented by each
remaining Unit in the balance will be increased. However, if additional Units
are issued by the Fund (through deposit of Securities by the Sponsors in
connection with the sale of additional Units), the aggregate value of Securities
in the Fund will be increased by amounts allocable to additional Units, and the
fractional undivided interest represented by each Unit in the balance will be
decreased. Units will remain outstanding until redeemed upon tender to the
Trustee by any Holder (which may include the Sponsors) or until the termination
of the Indenture (see Redemption; Administration of the Fund--Amendment and
Termination). Units will remain outstanding until redeemed upon tender to the
Trustee by any Holder (which may include the Sponsors) or until the termination
of the Indenture (see Redemption; Administration of the Fund--Amendment and
Termination).
RISK FACTORS
An investment in Units of the Fund should be made with an understanding of
the risks which an investment in fixed rate debt obligations denominated in
foreign currencies may entail, including the risk that the value of the
Portfolio and hence of the Units will decline with increases in interest rates
and declining values of the relevant foreign currencies. In recent years there
have been wide fluctuations in interest rates and currency exchange rates and
thus in the value of fixed rate debt obligations generally. The Sponsors cannot
predict future economic policies or their consequences or, therefore, the course
or extent of any similar fluctuations in the future. The Portfolio consists
primarily of publicly held Debt Obligations which, in many cases, do not have
the benefit of covenants which would prevent the issuer from engaging in capital
restructurings or borrowing transactions in connection with corporate
acquisitions, leveraged buyouts or restructurings which could have the effect of
reducing the ability of the issuer to meet its debt obligations and might result
in the value of the underlying Portfolio being reduced.
FOREIGN ISSUERS
The percentage for this Fund invested in securities in foreign issuers is
set forth under the Investment Summary. Depending on the percentage, it may be
appropriate for investors in the Fund to consider certain investment risks that
distinguish investments in Securities of foreign issuers from those of domesic
issuers. Those investment risks include future political and economic
developments, the possible imposition of withholding taxes on interest income
payable on the Securities held in the Portfolio, the possible seizure or
nationalization of foreign deposits, the possible establishment of exchange
controls or the adoption of other foreign governmental restrictions (including
expropriation, burdensome or confiscatory taxation and moratoriums) which might
adversely affect the payment or receipt of payment of amounts due on the
Securities. Investors should realize that, although the Fund's foreign
currency-denominated investments are only in securities denominated in the
currencies of those foreign nations considered by the Fund to have relatively
stable and friendly governments, the value of portfolio investments can be
adversely affected by political or social instability and unfavorable diplomatic
or other negative developments. The Fund will also be affected favorably or
unfavorably by changes in exchange rates between the U.S. dollar and the foreign
currencies in which its Securities are denominated. Since the Fund will invest
in securities denominated or quoted in currencies other than the U.S. dollar,
changes in foreign currency exchange rates will affect the value of Securities
in the Portfolio and the unrealized appreciation or depreciation of investments
so far as U.S. investors are concerned. The rate of exchange between the U.S.
dollar and other currencies is determined by forces of supply and demand in the
foreign exchange markets. These forces are affected by the international balance
of payments, the level of interest and inflation rates and other economic and
financial conditions, government intervention, speculation and other
2
<PAGE>
<PAGE>
factors. In addition, because many foreign issuers are not subject to the
reporting requirements of the Securities Exchange Act of 1934, there may be less
publicly available information about the foreign issuer than a U.S. domestic
issuer. Foreign issuers also are not necessarily subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable U.S. domestic issuers. However, the Sponsors
anticipate that adequate information will be available to allow the Sponsors to
supervise the Portfolio as set forth in Administration of the Fund--Portfolio
Supervision.
Information concerning the economic and political systems of foreign
countries represented in the Fund is available in registration statements and
periodic reports filed by these countries with the U.S. Securities and Exchange
Commission ('SEC'). Copies of these documents are available upon written request
to the Trustee at its address set forth on the back cover of this Prospectus.
FOREIGN EXCHANGE RATES
Since the Portfolio consists entirely of non-U.S. dollar denominated
securities, an investment in the Fund involves investment risks that are
substantially different from an investment in a fund which invests in U.S.
dollar denominated securities. This is because the U.S. dollar value of the
Portfolio (and hence of the Units) and of the distributions from the Fund will
vary with fluctuations in the U.S. dollar foreign exchange rates for the
relevant currencies.
Major industrialized countries have adopted 'floating' exchange rates,
under which daily currency valuations depend on supply and demand in a freely
fluctuating international market. Many smaller or developing countries have
continued to 'peg' their currencies to the U.S. dollar although there has been
some interest in recent years in 'pegging' currencies to 'baskets' of other
currencies or to a Special Drawing Right administered by the International
Monetary Fund. Currencies are generally traded by leading international
commercial banks and institutional investors (including corporate treasurers,
money managers, pension funds and insurance companies). From time to time,
central banks in a number of countries also are major buyers and sellers of
foreign currencies, mostly for the purpose of preventing or reducing substantial
exchange rate fluctuations.
Exchange rate fluctuations are partly dependent on a number of economic
factors including economic conditions within countries, the impacts of actual
and proposed government policies on the value of currencies, interest rate
differentials between different currencies and the balance of imports and
exports of goods and services and transfers of income and capital from one
country to another. These economic factors are influenced primarily by a
particular country's monetary and fiscal policies (although the perceived
political situation in a particular country may have an influence as
well--particularly with respect to transfers of capital). Investor psychology
may also be an important determinant of currency fluctuations in the short run.
Moreover, institutional investors trying to anticipate the future relative
strength or weakness of a particular currency may sometimes exercise
considerable speculative influence on currency exchange rates by purchasing or
selling large amounts of the same currency or currencies. However, over the long
term, the currency of a country with a low rate of inflation and a favorable
balance of trade should increase in value relative to the currency of a country
with a high rate of inflation and deficits in the balance of trade.
The currencies of Australia and Canada have fluctuated in value relative to
the U.S. dollar over the past ten years, as indicated in the tables presented on
page A-5.
The Trustee and the Evaluator will estimate current exchange rates for the
relevant currencies based on activity in the various currency exchange markets.
However, since these markets are volatile and are constantly changing, depending
on the activity at any particular time of the large international commercial
banks, various central banks, large multi-national corporations, speculators and
other buyers and sellers of foreign currencies, and since actual foreign
currency transactions may not be instantly reported, the exchange rates
estimated by the Trustee or the Evaluator may not be indicative of the amount in
U.S. dollars the Fund would receive had the Trustee sold any particular currency
in the market.
The foreign exchange transactions of the Fund generally will be concluded
by the Trustee with foreign exchange dealers acting as principals either on a
spot (i.e., cash) buying basis or on a forward foreign exchange basis on the
date the Fund is entitled to receive the applicable foreign currency. The
forward foreign exchange transactions will generally be of as short a duration
as practicable and will generally settle on the date of receipt of the
applicable foreign currency involving specific receivables or payables of the
Fund accruing in connection with the purchase and sale of its portfolio
Securities or the sale and redemption of Units of the Fund. These transactions
are accomplished by contracting to purchase or sell a specific currency at a
future date and price set
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at the time of the contract. The cost to the Fund of engaging in these foreign
currency transactions varies with such factors as the currency involved, the
length of the contract period and the market conditions then prevailing. Since
transactions in foreign currency exchange are usually conducted on a principal
basis, fees or commissions are not normally involved. Although foreign exchange
dealers trade on a net basis they do realize a profit based upon the difference
between the price at which they are willing to buy a particular currency (bid
price) and the price at which they are willing to sell the currency (offer
price). The relevant exchange rate used for evaluations of the Securities will
include the cost of the buying or selling, as the case may be, of a seven-day
forward foreign exchange contract in the relevant currency to correspond to the
requirement that Units when purchased settle on a regular basis and that the
Trustee settle redemption requests in U.S. dollars within seven days.
BANKS, BANK HOLDING COMPANIES AND OTHER FINANCIAL INSTITUTIONS
Banks are subject to extensive governmental regulations which may limit
both the amounts and types of loans and other financial commitments which may be
made and interest rates and fees which may be charged. The profitability of
financial institutions is largely dependent upon the availability and cost of
funds for the purpose of financing lending operations under prevailing money
market conditions at both global and local levels. Also, general economic
conditions play an important part in the operations of this industry and
exposure to credit losses arising from possible financial difficulties of
borrowers might affect an institution's ability to meet its obligations.
Furthermore, loan quality would almost certainly begin to deteriorate in the
event of a prolonged recession and even at the end of a recession banks are
unlikely to experience a quick end to rising problem assets and losses. During
the early 1990's the credit ratings of many foreign banks have been subject to
significant downgrades due to a deterioration in asset quality which has
negatively impacted earnings and capital adequacy. The decline in asset quality
of major foreign banks has been brought about largely by recessionary conditions
in their local economies. These factors also affect bank holding companies and
other financial institutions, which may not be as highly regulated as banks and
may be more able to expand into other non-financial and non-traditional
businesses.
LIQUIDITY
The Securities in the Fund, including securities purchased in initial
public offerings, will customarily be in bearer form and may not have been
registered under the Securities Act of 1933 and may not be exempt from the
registration requirements of the Act. Sales of non-exempt bearer Securities by
the Fund in U.S. securities markets are subject to severe restrictions and may
well not be practicable. Accordingly, sales of these Securities by the Fund will
generally be effected only in foreign securities markets. Although the Sponsors
do not believe that the Fund will encounter obstacles in disposing of the
Securities, investors should realize that many of the Securities may be traded
in foreign countries where the securities markets are not as developed or
efficient and may not be as liquid as those in the U.S. To the extent the
liquidity of these markets becomes impaired, however, the value of the Fund when
responding to a substantial volume of requests for redemption of Units (should
redemptions be necessary despite the market making activities of the Sponsors)
received at or about the same time could be adversely affected. This might
occur, for example, as a result of economic or political turmoil in a country in
whose currency the Fund had a substantial portion of its assets invested, or
should relations between the U.S. and such foreign country deteriorate markedly.
The Securities may not be listed on a securities exchange. Whether or not the
Securities are listed, the principal trading market for the Securities will
generally be in the over-the-counter market. As a result, the existence of a
liquid trading market for the Securities may depend on whether dealers will make
a market in the Securities. There can be no assurance that a market will be made
for any of the Securities, that any market for the Securities will be maintained
or of the liquidity of the Securities in any markets made. In addition, the Fund
may be restricted under the Investment Company Act of 1940 from selling
Securities to any Sponsor. The price at which the Securities may be sold to meet
redemptions and the value of the Fund will be adversely affected if trading
markets for the Securities are limited or absent. The Fund may also contain
non-exempt Securities in registered form which have been purchased on a private
placement basis. Sales of these Securities may not be practicable outside the
United States, but can generally be made to U.S. institutions in the private
placement market which may not be as liquid as the general U.S. securities
market. Since the private placement market is less liquid, the prices received
may be less than would have been received had the markets been broader.
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EXCHANGE CONTROLS
On the basis of the best information available to the Sponsors, except as
indicated under Investment Summary, at the present time none of the Securities
is subject to exchange control restrictions under existing law which would
materially interfere with payment to the Fund of amounts due on the Securities
either because the particular jurisdictions have not adopted any currency
regulations of this type or because the issues qualify for an exemption or the
Fund, as an extraterritorial investor, has qualified its purchase of the
Securities as exempt by following applicable 'validation' or similar regulatory
or exemptive procedures. However, there can be no assurance that exchange
control regulations might not be adopted in the future which might adversely
affect payments to the Fund.
In addition, the adoption of exchange control regulations and other legal
restrictions could have an adverse impact on the marketability of international
securities in the Portfolio and on the ability of the Fund to satisfy its
obligation to redeem Units tendered to the Trustee for redemption (see
Redemption).
WITHHOLDING TAXES
On the basis of the best information available to the Sponsors, under
existing law there are no withholding taxes applicable to the Securities, except
as stated under the Investment Summary; however, Holders are urged to consult
their own tax advisors in this regard. If the Fund obtains a certificate from an
issuer evidencing payment of withholding taxes with respect to a Debt
Obligation, the Fund will so notify Holders. A Holder is required to include in
his gross income the entire amount of interest paid on his pro rata portion of
the Debt Obligation including the amount of tax withheld therefrom. However, if
the tax constitutes an income tax for which U.S. foreign tax credits may be
taken, the Holder may be able to obtain applicable foreign tax credits (subject
to statutory limitations) or deductions. (See Taxes.)
JURISDICTION OVER, AND U.S. JUDGMENTS CONCERNING, FOREIGN OBLIGORS
Non-U.S. issuers of the Securities will generally not have submitted to the
jurisdiction of U.S. courts for purposes of lawsuits relating to those
Securities. If the Portfolio contains Securities of such an issuer, the Fund as
a holder of those obligations may not be able to assert its rights in U.S.
courts under the documents pursuant to which the Securities are issued. Even if
the Fund obtains a U.S. judgment against a foreign obligor, there can be no
assurance that the judgment will be enforced by a court in the country in which
the foreign obligor is located. In addition, a judgment for money damages by a
court in the United States if obtained, including a money judgment based on an
obligation expressed in a foreign currency, will ordinarily be rendered only in
U.S. dollars. It is not clear, however, whether, in granting a judgment, the
rate of conversion of the applicable foreign currency into U.S. dollars would be
determined with reference to the due date or the date the judgment is rendered.
Courts in other countries may have rules that are similar to, or different from,
the rules of U.S. courts.
LITIGATION AND LEGISLATION
At any time after the Initial Date of Deposit, litigation may be initiated
on a variety of grounds with respect to Debt Obligations in the Fund or the
issuers of the Debt Obligations. There can be no assurance that future
litigation will not have a material adverse effect on the Fund or will not
impair the ability of issuers to make payments due on the Debt Obligations. In
addition, there can be no assurance that foreign withholding taxes will not be
imposed on interest on Debt Obligations issued by non-United States issuers in
the future.
DESCRIPTION OF THE FUND
OVERVIEW
The rapid growth of foreign capital markets has led to increased
fixed-income opportunities. Bonds denominated in non-U.S. currencies currently
represent more than half of the value of all bonds outstanding. Economies and
financial markets in various countries do not all move in the same direction at
the same time. As one country's economy improves, another's may be in decline.
Countries with stronger economies are likely to have stronger currencies than
those with weaker economic conditions.
Investing in securities from just one country (even the U.S.) leads to risk
from adverse economic or market conditions in that country. Global
diversification of investments can reduce overall portfolio risk. Merrill Lynch,
Pierce, Fenner & Smith, as Agent for the Sponsors ('Agent for the Sponsors')
believes that all but the most conservative investors should normally allocate
some portion of their fixed-income investments to bonds denominated in foreign
currencies. Since 1984, International Bond Fund Series have offered investors an
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opportunity to hold professionally selected portfolios of these bonds to provide
current income and possible capital appreciation. Bonds payable in some foreign
currencies may pay higher interest rates than available on comparable
U.S.-dollar denominated bonds (although these rates may reflect additional risk
of adverse currency fluctuations). In addition to this current income, both the
amount of income when converted to U.S. dollars and the U.S. dollar equivalent
of the principal amount vary with fluctuations in the exchange ratesof the
relevant currencies relative to the U.S. dollar.
The following chart shows the compound annual rates of return on debt
obligations in selected currencies for the period June 1983 through June 1993,
both in terms of the U.S. dollars and the local currency. This chart represents
past performance and is no guarantee of future results of these currencies or of
any Series of International Bond Fund, Defined Asset Funds.
<TABLE>
<CAPTION>
U.S. LOCAL
COUNTRY DOLLARS CURRENCY
<S> <C> <C>
Australia 16.32% 19.51%
France 17.35 14.07
United Kingdom 11.79 12.08
Canada 12.38 12.87
Netherlands 13.74 9.32
Japan 16.59 7.57
Germany 12.73 8.34
Switzerland 8.55 5.04
United States 13.87 --
Source: IBBOTSON
</TABLE>
FUND PERFORMANCE
Information on percentage changes in the U.S. dollar value of Units, on the
basis of changes in Unit price plus the amount of income and capital
distributions may be included from time to time in advertisements, sales
literature, reports and other information furnished to current or prospective
Holders. Total return figures are not averaged, and may not reflect deduction of
the sales charge, which would decrease the return. Average annualized return
figures reflect deduction of the maximum sales charge. No provision is made for
any income taxes payable. Information may also be given treating Unit
distributions as reinvested in the Corporate Fund Accumulation Program Inc., a
no-load mutual fund holding a portfolio of U.S. corporate debt obligations (not
denominated in foreign currencies), primarily rated A or better at the time of
purchase.
Fund performance may be compared to the performance data on the same basis
(distributions reinvested or distributed) described in publications such as
Lipper Analytical Services, Inc., Morningstar Publications, Inc., Money
Magazine, The New York Times, U.S. News and World Report, Business Week, CDA
Investment Technology, Inc., Forbes Magazine or Fortune Magazine. As with other
performance data, performance comparisons should not be considered
representative of the Fund's relative performance for any future period. Each
country, issuer and security must be approved by Defined Asset Funds research
analysts.
THE PORTFOLIO
The Portfolio contains different issues of bonds, debentures, notes or
other straight debt obligations with fixed final maturity dates which are
payable in the foreign currencies specified under Investment Summary.
Experienced professional buyers and security analysts in Defined Asset Funds,
with access to thousands of different issues and extensive research, who are in
close contact with the markets for suitable securities, select securities for
deposit in the Fund considering the following factors, among others: (a) the
quality of the Debt Obligations and whether the Debt Obligations had, in the
opinion of the Agent for the Sponsors, credit characteristics comparable to
securities which have been rated in the category AA or better by at least one
recognized rating agency (see Description of Ratings); (b) the yield and price
of the Debt Obligations in a particular currency relative to other comparable
debt obligations in the same currency; (c) the diversification of the Portfolio,
taking into account the availability in the market of debt obligations of
foreign issuers in various utility, industrial and governmental classifications
that meet the Fund's criteria; (d) whether the Debt Obligations were issued
after July 18, 1984 if interest thereon is U.S. source income; and (e) whether
any foreign withholding taxes are applicable to the Debt Obligations.
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The yields on debt obligations of the type deposited in the Fund are
dependent on a variety of factors, including international money market
conditions, general conditions of the international bond market, size of a
particular offering, the maturity of the obligation and credit of the issuer. In
addition, interest rates tend to be lower on securities payable in strong
currencies than on securities payable in weak currencies. As a result interest
income as a percentage of Fund assets may be significantly lower than interest
income of a Fund which invests assets based on current return without regard to
currency strength.
Because certain of the Securities from time to time may be redeemed or will
mature in accordance with their terms or may be sold under certain circumstances
described herein, no assurance can be given that the Fund will retain for any
length of time its present size and composition (see Redemption). Many of the
Debt Obligations may be subject to redemption prior to their stated maturity
dates pursuant to optional refunding or sinking fund redemption provisions or
otherwise. In general, optional refunding redemption provisions are more likely
to be exercised when the offering side evaluation is at a premium over par than
when it is at a discount from par. Generally, the offering side evaluation of
Debt Obligations will be at a premium over par when market interest rates fall
below the coupon rate on the Debt Obligations. The percentage of face amount of
Debt Obligations in the Portfolio which were acquired on the Date of Deposit at
an offering side evaluation in excess of par is set forth under the Investment
Summary. Certain Debt Obligations in the Portfolio may be subject to sinking
fund provisions early in the life of the Fund. These provisions are designed to
redeem a significant portion of an issue gradually over the life of the issue;
obligations to be redeemed are generally chosen by lot.
The Fund consists of the Securities (or contracts to purchase the
Securities) listed under Portfolio (including any replacement debt obligations
and Additional Securities deposited in the Fund in connection with the sale of
additional Units to the public as described below) as long as they may continue
to be held from time to time in the Fund together with accrued and undistributed
income thereon and undistributed and uninvested cash realized from the
disposition or redemption of Securities (see Administration of the
Fund--Portfolio Supervision).
The Indenture authorizes the Sponsors to increase the size and the number
of Units of the Fund by the deposit of Additional Securities and the issue of a
corresponding number of additional Units subsequent to the Initial Date of
Deposit provided that the original relationship among the face amounts of
Securities of specified interest rates and maturities is maintained. Also,
Securities may be sold under certain circumstances (see Redemption;
Administration of the Fund--Portfolio Supervision). As a result, the aggregate
face amount of the Securities in the Portfolio will vary over time.
Because each Defined Asset Fund is a defined portfolio of preselected
securities, purchasers know in advance what they are investing in. A defined
portfolio is listed, so that generally the securities and their maturities are
known before an investor buys. Of course, the portfolio will change somewhat
over time as additional securities are deposited, as securities mature or as
they are sold to meet redemptions and in the limited other circumstances
described below.
Each Portfolio is divided into Units, representing equal shares of
underlying assets. On the Initial Date of Deposit each Unit represented the
fractional undivided interest in the Fund set forth under the Investment
Summary. Thereafter, if any Units are redeemed by the Trustee the face amount of
Securities in the Fund will be reduced by amounts allocable to redeemed Units,
and the fractional undivided interest represented by each Unit in the balance
will be increased. However, if additional Units are issued by the Fund (through
deposit of Additional Securities by the Sponsors in connection with the sale of
additional Units), the aggregate value of Securities in the Fund will be
increased by amounts allocable to additional Units, and the fractional undivided
interest represented by each Unit in the balance will be decreased. Units will
remain outstanding until redeemed upon tender to the Trustee by any Holder
(which may include the Sponsors) or until the termination of the Indenture (see
Redemption; Administration of the Fund--Amendment and Termination).
Neither the Sponsors nor the Trustee shall be liable in any way for any
default, failure or defect in any Security. In the event of a failure to deliver
any Debt Obligation that has been purchased for the Fund under a contract
deposited hereunder ('Failed Debt Obligation'), including any Debt Obligation
purchased on a when, as and if issued basis, the Sponsors are authorized under
the Indenture to direct the Trustee to acquire replacement obligations
substantially similar to those originally contracted for and not delivered to
make up the original Portfolio of the Fund. If replacement obligations are not
acquired, the Sponsors will, on or before the next following Distribution Day,
cause to be refunded the attributable sales charge, plus the attributable Cost
of
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Securities to Fund listed under Portfolio, plus interest attributable to the
Failed Debt Obligation (converted into U.S. dollars at the best spot buying
exchange rate offered to the Trustee on such date). (See Administration of the
Fund--Portfolio Supervision.)
Should any contract deposited hereunder fail, there is no assurance that a
substitute security of comparable value in U.S. dollars can be purchased with
the moneys held in the Fund to cover this purchase. At the time of the contract
failure, moneys in the Fund may have been converted into the currency required
to complete the purchase. Unless a substitute security in the same currency can
be purchased, the Fund will have to convert the foreign currency into a new
currency or back into U.S. dollars. Depending upon the exchange rates offered to
the Fund on such date, the U.S. dollar equivalency of the currency held in the
Fund at the time of the contract failure may be greater or less than the U.S.
dollar equivalent of the purchase price of the security whose contract failed.
INCOME; ESTIMATED CURRENT RETURN; ESTIMATED LONG TERM RETURN
Generally. Each Unit receives an equal share of monthly distributions of
interest income and of any principal distributions as bonds mature or are
called, redeemed or sold. The estimated net annual U.S. dollar interest rate per
Unit on the business day prior to the date of this Prospectus is set forth under
the Investment Summary and was calculated on the exchange rate basis specified
therein. This rate shows the estimated annual U.S. dollar interest rate per Unit
expressed as a percentage of $1,000 after deducting estimated annual fees and
expenses expressed as a percentage. This rate will change on a daily basis as
the relevant U.S. dollar exchange rates fluctuate and as Securities mature, are
exchanged, redeemed, paid or sold, as Replacement Securities are purchased, as
Additional Securities are deposited and new Units created and as the expenses of
the Fund change.
The Sponsors deliver to the Trustee on the Initial Date of Deposit and each
subsequent date of deposit a letter or letters of credit in the amount of the
cost (plus accrued interest) of securities to be acquired pursuant to contracts
deposited in the Fund. The Trustee may draw down on this letter of credit at any
time and deposit the cash so drawn in a non-interest bearing account for the
Fund. The Trustee has the use of these funds, on which it pays no interest, for
the period prior to its purchase of when-issued and delayed-delivery securities.
Interest in U.S. dollars on the Securities in the Fund, less estimated fees
of the Trustee and Sponsors and certain other expenses, is expected to accrue at
the daily rate (based on a 360-day year) shown under the Investment Summary. The
actual net annual U.S. dollar interest rate will vary with changes in the
relevant exchange rates and as Securities are exchanged, redeemed, paid or sold
or as the expenses of the Fund change.
The Estimated Current Return and Estimated Long Term Return on the business
day prior to the date of this Prospectus are set forth under the Investment
Summary and give different information about the return to investors. Estimated
Current Return on a Unit represents annual cash receipts from coupon-bearing
debt obligations in the Fund's Portfolio (after estimated annual expenses)
divided by the Public Offering Price (including the sales charge).
Unlike Estimated Current Return, Estimated Long Term Return is a measure of
the estimated return to the investor earned over the estimated life of the Fund.
The Estimated Long Term Return represents an average of the yields to maturity
(or earliest call date for obligations trading at prices above the particular
call price) of the Debt Obligations in the Portfolio, calculated in accordance
with accepted bond practice and adjusted to reflect expenses and sales charges.
Under accepted bond practice, bonds are customarily offered to investors on a
'yield price' basis, which involves computation of yield to maturity (or earlier
call date), and which takes into account not only the interest payable on the
bonds but also the amortization or accretion to a specified date of any premium
over or discount from the par (maturity) value in the bond's purchase price. In
calculating Estimated Long Term Return, the average yield for the Portfolio is
derived by weighting the yield of each Debt Obligation by the market value of
the Debt Obligation and by the amount of time remaining to the date to which the
Debt Obligation is priced. Once the average Portfolio yield is computed, this
figure is then adjusted for estimated expenses and the effect of the maximum
sales charge paid by investors. The Estimated Long Term Return calculation does
not take into account certain delays in distributions of income and the timing
of other receipts and distributions on Units and may, depending on maturities,
over or understate the impact of sales charges. Both of these factors may result
in a lower figure.
Both Current Return and Long Term Return are subject to fluctuation with
changes in Portfolio composition (including the redemption, sale or other
disposition of Debt Obligations in the Portfolio), changes
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in market value of the underlying Debt Obligations, changes in the exchange
rates of the respective currencies and changes in fees and expenses, including
sales charges, and therefore can be materially different than the figures set
forth. The size of any difference between Estimated Current Return and Estimated
Long Term Return can also be expected to fluctuate at least as frequently. In
addition, both return figures may not be directly comparable to yield figures
used to measure other investments, and since the return figures are based on
certain assumptions and variables the actual return received by a Holder may be
higher or lower.
Sales charges on Defined Asset Funds range from under 1.0% to 5.5%. This
may be less than you might pay to buy a comparable fund. Defined Asset Funds can
be a cost-effective way to purchase and hold investments. Annual operating
expenses are generally lower than for managed funds. Because unit investment
trusts are not actively managed and have limited transactions, costs are
generally less than 0.25% per year. Keeping costs low increases earnings. When
compounded annually, small differences in expense ratios can make a big
difference in earnings.
Accrued Interest. In addition to the Public Offering Price, the price of a
Unit includes accrued interest on the Securities in U.S. dollars from the
Initial Date of Deposit (calculated on the basis of the current exchange rates
for the relevant currencies on the date Holders commit for Units). The accrued
interest that is added to the Public Offering Price represents the amount of
accrued interest on the Securities from the Initial Date of Deposit to, but not
including, the settlement date for Units. However, Securities deposited in the
Fund also include an item of accrued but unpaid interest up to the Initial Date
of Deposit. To avoid having Holders pay this additional accrued interest (which
earns no return) when they purchase Units, the Trustee is responsible for the
payment of accrued interest on the Debt Obligations to the Initial Date of
Deposit and then recovers this amount in U.S. dollars from the earliest interest
payments received by the Fund. Thus, the Sponsors can sell the Units at a price
that includes interest from the Initial Date of Deposit to the settlement date
for the Units. Additionally, interest on the Debt Obligations in the Fund is
paid on an annual basis. Therefore, it may take several months after the Initial
Date of Deposit for the Trustee to receive sufficient interest payments on the
Securities to begin distributions to Holders. Further, because interest on the
Securities is not received by the Fund at a constant rate throughout the year,
any Monthly Income Distribution may be more or less than the interest actually
received by the Fund. In order to eliminate fluctuations, the Trustee is
required to advance the amounts in U.S. dollars necessary to provide
approximately equal Monthly Income Distributions, assuming no changes in
currency exchange rates. The Trustee will be reimbursed in U.S. dollars, without
interest, for these advances from interest received on the Securities. Of
course, the amount actually distributed may fluctuate, depending on changes in
the currency exchange rates. Therefore, to account for those factors, accrued
interest in U.S. dollars is always added to the value of the Units. And, because
of the varying interest payment dates of the Securities, accrued interest at any
time will be greater than the amount of interest actually received by the Fund
and distributed to Holders. If a Holder sells all or a portion of his Units in
U.S. dollars, he will receive his proportionate share of the accrued interest
from the purchaser of his Units in U.S. dollars to the settlement date for the
sale (calculated on the basis of current exchange rates on the date the
transaction is entered into). Similarly, if a Holder redeems all or a portion of
his Units, the Redemption Price per Unit will include accrued interest on the
Securities in U.S. dollars calculated on the basis of current exchange rates on
the date the Units are tendered for redemption. And if a Security is sold,
redeemed or otherwise disposed of, accrued interest will be received by the Fund
and will be distributed periodically to Holders.
Certain Debt Obligations may have been purchased on a when, as and if
issued basis or may have a delayed delivery (see Investment Summary). Holders of
Units will be 'at risk' with respect to these Debt Obligations (i.e., may derive
either gain or loss from fluctuations in the offering side evaluation of the
Debt Obligations) from the date they commit for Units. Since interest on
when-issued and delayed-delivery Debt Obligations does not begin accruing to the
benefit of Holders until their respective dates of delivery, in order to provide
income to the Holders from this non-accrual period, the Trustee will advance
funds to the Fund in an amount in U.S. dollars equal to the amount of interest
in U.S. dollars that would have accrued on these Debt Obligations between the
date of settlement for the Units and the dates of delivery. These advances
eliminate the necessity of reducing Monthly Income Distributions until
when-issued or delayed-delivery Debt Obligations are delivered and sufficient
interest payments are received to begin distributions to Holders.
TAXES
The following discussion addresses only the tax consequences of Units held
as capital assets and does not address the tax consequences of Units held by
dealers, financial institutions or insurance companies.
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In the opinion of Davis Polk & Wardwell, special counsel for the Sponsors,
under existing law:
The Fund is not an association taxable as a corporation for Federal
income tax purposes, and income received by the Fund will be treated as the
income of the Holders in the manner set forth below.
Each Holder will be considered the owner of a pro rata portion of each
Debt Obligation in the Fund under the grantor trust rules of Sections
671-679 of the Internal Revenue Code of 1986, as amended (the 'Code'). In
order to determine the face amount of a Holder's pro rata portion of each
Debt Obligation on the Initial Date of Deposit, see Face Amount under
Portfolio. The total cost (in U.S. dollars) to a Holder of his Units,
including sales charges, is allocated to his pro rata portion of each Debt
Obligation, in proportion to the fair market values thereof on the date the
Holder purchases his Units, in order to determine his tax cost (in U.S.
dollars) for his pro rata portion of each Debt Obligation. In order for a
Holder who purchases his Units on the Initial Date of Deposit to determine
the fair market value of his pro rata portion of each Debt Obligation on
such date, see Cost of Securities to Fund under Portfolio.
Each Holder will be considered to have received the foreign currency
interest (without reduction for the amount of any foreign taxes withheld
therefrom) on his pro rata portion of each Debt Obligation when foreign
currency interest on the Debt Obligation is received by the Fund. A Holder
who uses the cash method of accounting will recognize U.S. dollar ordinary
income based on the exchange rate at that time. A Holder using the accrual
method of accounting will generally be required to translate accrued
interest income into U.S. dollars at the average exchange rate during the
accrual period unless such Holder makes an election to use the spot accrual
convention. If such an election is made, interest income will be translated
at the exchange rate in effect (i) on the last day of an accrual period (or
in the case of a partial accrual period, the spot rate on the last day of
the taxable year), or (ii) if the date of receipt is within five business
days of the last day of the interest accrual period, the spot rate on the
date of receipt. An accrual basis Holder will have foreign currency gain or
loss, which will be treated as ordinary income or loss, if the U.S. dollar
value of the foreign currency payments received (determined on the date the
foreign currency interest is received by the Fund) in respect of such
accrual period is greater or less than the amount of U.S. dollars included
in income by the accrual basis Holder with respect to the foreign currency
interest for such accrual period. If any foreign taxes are withheld from
the interest on a Holder's pro rata portion of a Debt Obligation, and these
foreign taxes constitute income taxes for which U.S. foreign tax credits
may be taken, the Holder may elect to deduct the amount of such foreign
taxes (measured in U.S dollars based on the exchange rate used by the
Holder in determining his U.S. dollar ordinary income) if he itemizes
deductions or to credit such amount against his Federal income taxes
subject to statutory limitations. An election to deduct rather than credit
such foreign taxes may increase a Holder's alternative minimum tax
liability.
An individual Holder who itemizes deductions will be able to deduct
his pro rata share of the fees and expenses of the Fund only to the extent
that this amount together with the Holder's other miscellaneous deductions
exceeds 2% of his adjusted gross income.
The Fund may contain Debt Obligations that were originally issued at a
discount ('original issue discount'). The following principles will apply
to each Holder's pro rata portion of any Debt Obligation originally issued
at a discount. In general, original issue discount is defined as the
difference between the price at which a debt obligation was issued and its
stated redemption price at maturity. Original issue discount on a debt
obligation issued on or after July 2, 1982 will accrue as interest over the
life of the obligation under a formula based on the compounding of
interest. Original issue discount on a debt obligation issued prior to July
2, 1982 will accrue as interest over the life of the debt obligation on a
straight line basis. Each Holder will be required to include in income in
each year the amount of original issue discount which accrues during the
year on his pro rata portion of any Debt Obligation originally issued at a
discount. If a Holder's tax basis for his pro rata portion of a Debt
Obligation issued with original issue discount is greater than its 'revised
issue price' but less than its stated redemption price at maturity (as may
be adjusted for certain payments), the Holder will be considered to have
purchased his pro rata portion of the Debt Obligation at an 'acquisition
premium.' The amount of original issue discount which must be accrued will
be reduced by the amount of such acquisition premium. The amount of accrued
original issue discount so included in income in respect of a Holder's pro
rata portion of a Debt Obligation is added to the Holder's tax basis
therefor.
The amount and accrual of original issue discount should be determined
in terms of the foreign currency under the original issue discount rules
discussed above, and then translated into U.S. dollars based
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on the average exchange rate in effect during the accrual period unless a
Holder makes an election under the spot accrual convention, described
above. A Holder will have foreign currency gain or loss, which will be
treated as ordinary income or loss, if the U.S. dollar value of the foreign
currency interest received by the Fund in respect of an accrual period
(computed by reference to the exchange rate on date the original issue
discount is received by the Fund) is greater or less than the amount of
U.S. dollars included in income by the Holder for such accrual period with
respect to the foreign currency original issue discount. Holders should
consult their own tax advisors in this regard.
If a Holder's cost for his pro rata portion of a Debt Obligation
exceeds the redemption price at maturity thereof (subject to certain
adjustments), the Holder will be considered to have purchased his pro rata
portion of the Debt Obligation with 'amortizable bond premium'. The Holder
may elect to amortize the premium prior to the maturity of the Debt
Obligation. Amortizable bond premium properly taken into account shall
reduce the Holder's interest income in the relevant foreign currency and
will result in a reduction of basis for his pro rata portion of the Debt
Obligation. A Holder who elects to amortize bond premium will have foreign
currency gain or loss, which will be treated as ordinary income or loss, if
the value of the U.S. dollar against the foreign currency at the time the
bond premium is treated as repaid to the Holder is greater than or less
than its value at the time the Holder purchased the Debt Obligation. With
respect to a Holder who does not elect to amortize bond premium, the amount
of bond premium will constitute a market loss when the bond matures.
A Holder will recognize taxable gain or loss when all or part of his
pro rata portion of a Debt Obligation is disposed of by the Fund for an
amount (measured in U.S. dollars based on the exchange rate at the time of
disposition) greater or less than his adjusted tax basis therefor (in U.S.
dollars) Thus, due to exchange rate fluctuations, a Holder may recognize
gain or loss on the disposition of a Debt Obligation, even if the
disposition proceeds expressed in the foreign currency equal the amount of
that foreign currency paid for the Debt Obligation. Any such taxable gain
or loss will be capital gain or loss except as provided in the next three
sentences. To the extent that any gain or loss is recognized is due to
exchange rate fluctuations as determined under applicable Treasury
regulations) such gain or loss will be treated as ordinary income or loss.
In addition, any gain from the disposition of a Holder's pro rata portion
of a Debt Obligation issued after July 18, 1984 and acquired by the Holder
at a 'market discount' (i.e., where the Holder's original cost for his pro
rata portion of the Debt Obligation (plus any original issue discount which
will accrue thereon) is less than its stated redemption price at maturity)
will be treated as ordinary income to the extent the gain does not exceed
the accrued market discount. The amount of such market discount should be
determined in terms of the foreign currency, and then translated into U.S.
dollars based on the exchange rate at the time the Debt Obligation is
disposed of (other than market discount which is included in income on a
current basis and is translated into U.S. dollars based on the average
exchange rate in effect during an accrual period). Capital gains are
generally taxed at the same rate as ordinary income. However, the excess of
net long-term capital gains over net short-term capital losses may be taxed
at a lower rate than ordinary income for certain non-corporate taxpayers. A
capital gain or loss is long-term if the asset is held for more than one
year and short-term if held for one year or less. The deduction of capital
losses is subject to limitations. A Holder will be considered to have
disposed of all or part of his pro rata portion of each Debt Obligation
when he sells or redeems all or some of his Units. A Holder will also be
considered to have disposed of all or part of his pro rata portion of a
Debt Obligation when all or part of the Debt Obligation is sold by the Fund
or is redeemed or paid at maturity.
Under the income tax laws of the State and City of New York, the Fund
is not an association taxable as a corporation and income received by the
Fund will be treated as the income of the Holders in the same manner as for
Federal income tax purposes.
Notwithstanding the foregoing, a Holder who is a non-resident alien
individual or a foreign corporation (a 'Foreign Holder') will generally not
be subject to United States Federal income taxes, including withholding
taxes, on the interest income (including any original issue discount) on,
or any gain from the sale or other disposition of, his pro rata portion of
any Debt Obligation provided that (i) the interest income or gain is not
effectively connected with the conduct by the Foreign Holder of a trade or
business within the United States, (ii) if the interest is United States
source income, the Debt Obligation is issued after July 18, 1984 and the
Foreign Holder does not own, actually or constructively, 10% or more of the
total combined voting power of all classes of voting stock of the issuer of
the Debt Obligation and is not a controlled foreign corporation related
(within the meaning of Section 864(d)(4) of the Code) to the issuer
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of the Debt Obligation, (iii) with respect to any gain, the Foreign Holder
(if an individual) is not present in the United States for 183 days or more
during the calendar year and (iv) the Foreign Holder provides the required
certification of his status and of certain other matters. Withholding
agents will file with the Internal Revenue Service foreign person
information returns with respect to such interest payments accompanied by
such certifications. Foreign Holders should consult their own tax advisors
with respect to United States Federal income tax consequences of ownership
of Units.
Holders will be taxed in the manner described above regardless of whether
such distributions from the Fund are actually received by the Holder or are
automatically reinvested in the Corporate Fund Accumulation Program, Inc.
The foregoing discussion relates only to United States Federal and certain
aspects of New York State and City income taxes. Holders may be subject to
taxation in New York or in other jurisdictions (including a Foreign Holder's
country of residence) and should consult their own tax advisors in this regard.
* * *
The Sponsors believe that (i) each Debt Obligation the interest on which is
United States source income was or will have been issued after July 18, 1984 and
(ii) interest on any Debt Obligation issued by a non-United States issuer is not
subject to any foreign withholding taxes under current law; however, Holders are
urged to consult their own tax advisors in this regard. There can be no
assurance that withholding taxes will not be imposed on interest on Debt
Obligations in the future.
After the end of each calendar year, the Trustee will furnish to each
Holder an annual statement containing information relating to the interest
received by the Fund on the Debt Obligations, the gross proceeds received by the
Fund from the disposition of any Debt Obligation (resulting from redemption or
payment at maturity of any Debt Obligation or the sale by the Fund of any Debt
Obligation), and the fees and expenses paid by the Fund. Except as set forth
above with respect to certain Foreign Holders, the Trustee will also furnish
annual information returns to each Holder and to the Internal Revenue Service.
PUBLIC SALE OF UNITS
PUBLIC OFFERING PRICE
The Public Offering Price of the Units during the initial offering period
and any offering of additional units is computed by dividing the offer side
evaluation of the Securities (as determined by the Evaluator) by the number of
Units outstanding and adding thereto the sales charge in effect during the
initial offering period at the applicable percentage of the offer side
evaluation per Unit (the net amount invested). For 'secondary market' sales the
Public Offering Price of the Units will be equal to the Evaluator's
determination of the aggregate bid side evaluation of the Securities in the Fund
adding thereto the applicable sales charge in effect for the secondary market
and dividing the sum by the number of the Units outstanding. A proportionate
share of any cash held by the Fund in the Capital Account not allocated to the
purchase of specific Securities and net accrued and undistributed interest
(calculated on the basis of current exchange rates on the date Holders commit
for Units) on the Securities to the date of delivery of the Units to the
purchaser is added to the Public Offering Price. The Public Offering Price of
the Units will vary from day to day in accordance with fluctuations in the
evaluations of the underlying Securities and changes in the relevant currency
exchange rates.
The following tables set forth, where applicable, for both the initial
offering period and for secondary market sales, the applicable percentage of
sales charge, the concession to dealers and the concession to introducing
dealers (i.e., dealers that buy and clear directly through a Sponsor or an
Underwriter who is an affiliate of a Sponsor). These amounts are reduced on a
graduated scale for sales to any purchaser of at least 250 Units and will be
applied on whichever basis is more favorable to the purchaser. To qualify for
the reduced sales charge and concession applicable to quantity purchases, the
dealer must confirm that the sale is to a single purchaser as defined below or
is purchased for its own account and not for distribution. Sales charges and
dealer concessions are as follows:
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INITIAL OFFERING PERIOD
<TABLE>
<CAPTION>
SALES CHARGE
(GROSS UNDERWRITING PROFIT)
<S> <C> <C> <C> <C>
-------------------------------------
<CAPTION>
DEALER
CONCESSION PRIMARY
AS PERCENT OF MARKET
AS PERCENT OF AS PERCENT OF PUBLIC CONCESSION
OFFER SIDE PUBLIC NET AMOUNT OFFERING TO INTRODUCING
NUMBER OF UNITS OFFERING PRICE INVESTED PRICE DEALERS
------------------ -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Less than 250.......................... 3.25% 3.359% 2.133% $23.40
250 - 499.............................. 2.50 2.564 1.625 18.00
500 - 749.............................. 2.00 2.041 1.300 14.40
750 - 999.............................. 1.50 1.523 0.975 10.80
1,000 or more.......................... 1.00 1.010 0.650 7.20
</TABLE>
SECONDARY MARKET SALES
<TABLE>
<CAPTION>
SALES CHARGE
(GROSS UNDERWRITING PROFIT)
<S> <C> <C> <C>
-----------------------------------
<CAPTION>
DEALER
CONCESSION
AS PERCENT OF
AS PERCENT OF AS PERCENT OF PUBLIC
BID SIDE PUBLIC NET AMOUNT OFFERING
NUMBER OF UNITS OFFERING PRICE INVESTED PRICE
---------------- -------------- --------------------
<S> <C> <C> <C>
Less than 250..................................... 3.75% 3.896% 2.438%
250 - 499......................................... 3.00 3.093 1.950
500 - 749......................................... 2.25 2.302 1.463
750 - 999......................................... 1.50 1.523 0.975
1,000 or more..................................... 1.00 1.010 0.650
</TABLE>
The above graduated sales charges will apply on all purchases on any one
day by the same purchaser of Units only in the amounts stated. For this purpose
purchases during the initial offering period will not be aggregated with
concurrent purchases of any other unit trusts sponsored by the Sponsors.
Purchases on the same day in the secondary market of one or more Series
sponsored by the Sponsors which have the same rates of sales charge will be
aggregated. Units held in the name of the spouse of the purchaser or in the name
of a child of the purchaser under 21 years of age are deemed to be registered in
the name of the purchaser. The graduated sales charges are also applicable to a
trustee or other fiduciary purchasing securities for a single trust estate or
single fiduciary account.
Employees of certain of the Sponsors and their affiliates and non-employee
directors of Merrill Lynch & Co., Inc. may purchase Units of this Fund at prices
based on a reduced sales charge of not less than $5.00 per Unit.
Evaluations of the Securities are determined by the Evaluator taking into
account the same factors referred to under Redemption--Computation of Redemption
Price per Unit. The determinations are made each business day as of the
Evaluation Time set forth under the Investment Summary, effective for all sales
made since the last of these evaluations (Section 4.01). With respect to the
evaluation of Securities during their initial syndicate offering period, the
'current offering price', as determined by the Evaluator, will normally be equal
to the syndicate offering price as of the Evaluation Time, unless the Evaluator
determines that a material event has occurred which it believes may result in
the syndicate offering price not accurately reflecting the market value of the
Securities, in which case the Evaluator, in making its determination, will
consider not only the syndicate offering price but also the factors described in
(b) and (c) in the description of how the bid side evaluation of the Securities
is determined for purposes of redemption of Units (see Redemption). The term
'business day', as used herein and under 'Redemption', shall exclude Saturdays,
Sundays and the following holidays as observed by the New York Stock Exchange:
New Year's Day, Washington's Birthday, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas.
COMPARISON OF PUBLIC OFFERING PRICE, SPONSORS' INITIAL REPURCHASE PRICE,
SECONDARY MARKET REPURCHASE PRICE AND REDEMPTION PRICE
On the business day prior to the Initial Date of Deposit the Public
Offering Price per Unit (which includes the sales charge) and the Sponsors'
Initial Repurchase Price per Unit (each based on the offering side evaluation
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of the Securities in the Fund--see above) exceeded the Sponsors' Repurchase
Price per Unit and the Redemption Price per Unit (each based upon the bid side
evaluation thereof--see Redemption) by the amounts set forth under the
Investment Summary.
The initial Public Offering Price per Unit of the Trust and the initial
Repurchase Price are based on the offer side evaluations of the Securities. The
secondary market Public Offering Price and the Sponsors' Repurchase Price in the
secondary market are based on bid side evaluations of the Securities. In the
past, the bid prices of publicly offered securities in the United States have
been lower than the offering prices thereof by as much as 1 1/2% or more of face
amount in the case of inactively traded issues and as little as 1/4% in the case
of actively traded issues but the difference between the offer and bid prices
has averaged about 1/2% to 1% of face amount. The differences between bid and
offering prices of issues traded in foreign securities markets are believed by
the Sponsors to be comparable. The amount of the difference between the bid and
offer price of the Securities in the Fund as of the Evaluation Time on the
business day prior to the Initial Date of Deposit, as determined by the
Evaluator, is set forth under Portfolio. For this and other reasons (including
fluctuations in the U.S. dollar value of the underlying Securities and the
current U.S. dollar exchange rates for the currencies in which the Securities
are denominated and the fact that the Public Offering Price includes the sales
charge), the amount realized by a Holder upon any sale or redemption of Units
may be less than the price paid by him for the Units.
PUBLIC DISTRIBUTION
During the initial offering period and thereafter to the extent that
additional Units continue to be offered for sale by means of this Prospectus,
Units will be distributed to the public at the Public Offering Price through the
Underwriting Account and dealers. The initial offering period is 30 days or less
if all Units are sold. So long as all Units initially offered have not been
sold, the Sponsors may extend the initial offering period for up to four
additional successive 30-day periods. Upon the completion of the initial
offering or of the offering period for additional Units, Units which remain
unsold or which may be acquired in the secondary market (see Market for Units)
may be offered directly to the public by this Prospectus at the secondary market
Public Offering Price determined in the manner provided above.
The Sponsors intend to qualify Units for sale in all states in the U.S. in
which qualification is deemed necessary through the Underwriting Account and by
dealers who are members of the National Association of Securities Dealers, Inc.
The Sponsors do not intend to qualify Units for sale in any foreign countries
and this Prospectus does not constitute an offer to sell Units in any country
where Units cannot lawfully be sold. Sales to dealers and to introducing
dealers, if any, will initially be made at prices which represent a concession
of the applicable rate specified in the table above, but the Agent for the
Sponsors reserves the right to change the rate of the concession to dealers and
the amount of the concession to introducing dealers from time to time. Any
dealer or introducing dealer may reallow a concession not in excess of the
concession to dealers.
UNDERWRITERS' AND SPONSORS' PROFITS
Upon sale of the Units, the Underwriters named under the Underwriting
Account, including the Sponsors, will receive sales charges at the rates set
forth in the table above. The Sponsors also realized a profit or loss on deposit
of the Securities in the Fund in the amount set forth under the Investment
Summary. This is the difference between the cost of the Securities to the Fund
(which is based on the U.S. dollar offer side evaluation of the Securities on
the Initial Date of Deposit) and the U.S. dollar purchase price of the
Securities to the Sponsors (based on the bid side evaluation). On each
subsequent deposit in connection with the creation of additional Units, the
Sponsors may also realize a profit or loss. In addition, any Sponsor or
Underwriter may realize profits or sustain losses in respect of Securities
deposited in the Fund which were acquired by the Sponsor or Underwriter from
underwriting syndicates of which the Sponsor or Underwriter was a member. During
the offering period the Underwriting Account also may realize profits or sustain
losses as a result of fluctuations after the Initial Date of Deposit in the U.S.
dollar offering side evaluation of the Securities and in the Public Offering
Price of the Units (see Investment Summary). Cash, if any, made available by
buyers of Units to the Sponsors prior to the settlement date for purchase of
Units may be used in the Sponsors' businesses, subject to the limitations of
Rule 15c3-3 under the Securities Exchange Act of 1934, and may be of benefit to
the Sponsors.
In maintaining a market for the Units (see Market for Units) the Sponsors
will also realize profits or sustain losses in the amount of any difference
between the prices at which they buy Units (based on the U.S. dollar bid side
evaluation of the Securities) and the prices at which they resell the Units
(which include the sales charge) or
14
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<PAGE>
the prices at which they redeem the Units (based on the U.S. dollar bid side
evaluation of the Securities), as the case may be.
MARKET FOR UNITS
During the initial offering period and any offering of additional Units,
the Sponsors intend to offer to purchase Units of this Series at prices based
upon the U.S. dollar offer side evaluation of the Securities. Thereafter, while
the Sponsors are not obligated to do so, it is their intention to maintain a
secondary market for Units of this Series and continuously to offer to purchase
Units of this Series at prices, subject to change at any time, which are based
upon the U.S. dollar bid side of the market, taking into account the same
factors referred to in determining the bid side evaluation of Securities for
purposes of redemption (see Redemption). This secondary market provides Holders
with a fully liquid investment. They can cash in units at any time without a
fee. The Sponsors also intend to use their best efforts to maintain a current
prospectus for this Series and subsequent series to the extent required by
applicable law in order for them to dispose of Units held in their inventory.
The Sponsors may discontinue purchases of Units of this series at prices based
on the U.S. dollar bid side evaluation of the Securities (i) should the supply
of Units exceed demand or for other business reasons, or (ii) if there is no
current prospectus for this series, or (iii) if, due to any change subsequent to
the date of this Prospectus in conditions imposed by regulatory or legislative
action, the Sponsors cannot at the time lawfully sell Units to the public
without incurring expenses or complying with conditions which they consider
unreasonable or onerous, or (iv) if the right of redemption shall have been
suspended, or (v) if the Indenture shall have been terminated or (vi) at any
time when the aggregate purchase price to the Sponsors of all outstanding series
of International Bond Fund held by the Sponsors in their inventories exceeds
$3,000,000. In this event, the Sponsors may nonetheless under certain
circumstances purchase Units, as a service to Holders, at prices based on the
current redemption prices for these Units (see Redemption). For instance, if it
becomes necessary for the Fund to sell Securities in order to meet redemptions,
and if it is not feasible to dispose of these Securities within seven days due
to conditions in the relevant non-U.S. securities market, the Sponsors intend to
purchase the Units tendered for redemption at prices based upon their current
redemption prices; provided, however, that the Sponsors do not intend to make
these purchases if in their judgment, exercised in good faith, the general
market for the Securities is, or will become, unsatisfactory for an extended
period of time or other inhibiting business or regulatory factors exist. The
Sponsors, of course, do not in any way guarantee the enforceability,
marketability or price of any Securities in the Portfolio or of the Units.
The Sponsors may redeem any Units they have purchased in the secondary
market or through the Trustee in accordance with the procedures described below
if they determine it is undesirable to continue to hold these Units in their
inventory. Factors which the Sponsors will consider in making this determination
will include the number of units of all series of all funds which they have in
their inventories, the saleability of the units and their estimate of the time
required to sell the units and general market conditions. For a description of
certain consequences of any redemption for the remaining Holders, see
Redemption.
A Holder who wishes to dispose of his Units should inquire of his bank or
broker as to current market prices in order to determine if there exist
over-the-counter prices in excess of the redemption price.
REDEMPTION
While it is anticipated that Units in most cases can be sold in the
over-the-counter market for an amount at least equal to the Redemption Price per
Unit (see Market for Units), Units may be redeemed at the office of the Trustee
set forth on the back cover of this Prospectus, upon tender on any business day,
as defined under Public Sale of Units--Public Offering Price, of Certificates
or, in the case of uncertificated Units, delivery of a request for redemption,
and payment of any relevant tax, without any other fee (Section 5.02).
Certificates to be redeemed must be properly endorsed or accompanied by a
written instrument or instruments of transfer. Holders must sign exactly as
their names appear on the face of the Certificate with the signature guaranteed
by an eligible guarantor institution, or in some other manner acceptable to the
Trustee. In certain instances the Trustee may require additional documents
including, but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority.
On the seventh calendar day following the tender (or if the seventh
calendar day is not a business day on the first business day prior thereto), the
Holder will be entitled to receive the proceeds of the redemption in an amount
per Unit equal to the Redemption Price per Unit (see below) as determined as of
the Evaluation Time next following the tender. The price received upon
redemption may be more or less than the amount paid by the Holder depending on
the value of the Securities in the Portfolio at the time of redemption.
Principal is normally distributed as bonds mature, or are called, redeemed, or
sold. Except for sales of Securities (which would be at
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<PAGE>
then current market prices) and subject to the bond issuers paying the amounts
due, return of principal to Holders who retain their Units until termination of
the Trust should be relatively unaffected by changes in interest rates. Of
course, a gain or loss could be recognized if Units are sold before then. So
long as the Sponsors are maintaining a market at prices not less than the
Redemption Price per Unit, the Sponsors will repurchase any Units tendered for
redemption no later than the close of business on the second business day
following the tender (see Market for Units). The Trustee is authorized in its
discretion, if the Sponsors do not elect to repurchase any Unit tendered for
redemption or if a Sponsor tenders Units for redemption, to sell the Units in
the over-the-counter market at prices which will return to the Holder a net
amount in cash equal to or in excess of the Redemption Price per Unit for these
Units (Section 5.02).
Securities are to be sold in order to make funds available for redemption
(Section 5.02). The Securities to be sold will be selected by the Sponsors in
accordance with procedures specified in the Indenture on the basis of those
market and credit factors as they may determine are in the best interests of the
Fund. Provision is made under the Indenture for the Sponsors to specify minimum
face amounts in which blocks of Securities are to be sold in order to obtain the
best price for the Fund. These minimum amounts may vary from time to time in
accordance with market conditions.
To the extent that Securities are sold, the size and diversity of the Fund
will be reduced. Sales will usually be required at a time when Securities would
not otherwise be sold and may result in lower prices than might otherwise be
realized. The price received upon redemption may be more or less than the amount
paid by the Holder depending on the value of the Securities in the Portfolio at
the time of redemption. In addition, because of the minimum face amounts in
which Securities are required to be sold, the proceeds of sale may exceed the
amount required at the time to redeem Units; these excess proceeds will be
distributed to Holders. (See Administration of the Fund--Portfolio Supervision.)
The right of redemption may be suspended and payment postponed (1) for any
period during which the New York Stock Exchange, Inc. is closed other than for
customary weekend and holiday closings, (2) for any period during which, as
determined by the SEC, (i) trading on that Exchange is restricted or (ii) an
emergency exists as a result of which disposal or evaluation of the Securities
is not reasonably practicable, or (3) for any other periods that the SEC may by
order permit (Section 5.02).
COMPUTATION OF REDEMPTION PRICE PER UNIT
Redemption Price per Unit is computed by the Trustee as of the Evaluation
Time on each June 30 and December 31 (or the last business day prior thereto) on
any business day next following the tender of any Unit for redemption, and on
any other business day desired by the Trustee or the Sponsors, by adding (a) the
aggregate U.S. dollar bid side evaluation of the Securities, (b) the U.S. dollar
equivalent (at the relevant exchange rate) of cash on hand in the Fund (other
than cash covering contracts to purchase Securities), (c) the U.S. dollar
equivalent (at the relevant exchange rate) of accrued and unpaid interest up to
but not including the date of redemption and (d) all other assets of the Fund;
deducting therefrom the sum of (x) the U.S. dollar equivalent (at the relevant
exchange rate) of taxes or other governmental charges against the Fund not
previously deducted, (y) accrued fees and expenses of the Trustee (including
legal and auditing expenses), the Sponsors, the Evaluator and counsel, and
certain other expenses and (z) the U.S. dollar equivalent (at the relevant
exchange rate) of cash held for distribution to Holders of record as of a date
prior to the evaluation; and dividing the result by the number of Units
outstanding as of the date of computation.
The aggregate bid or offer side evaluation of the Securities is determined
by the Evaluator in the following manner: if the Securities are listed on a
securities exchange, this evaluation is generally based on the U.S. dollar
equivalent (at the relevant exchange rate) of the closing sale prices on the
exchange (unless the Evaluator deems these prices inappropriate as a basis for
valuation). If the Securities are not so listed or, if so listed and the
principal market therefor is other than on the exchange or there are no closing
sale prices on the exchange, the valuation is generally based on the U.S. dollar
equivalent (at the relevant exchange rate) of the closing sale prices in the
over-the-counter market (unless the Evaluator deems these prices inappropriate
as a basis for valuation). If closing sale prices are unavailable, the
evaluation is generally determined (a) on the basis of the U.S. dollar
equivalent (at the relevant exchange rate) of current bid or offer prices of the
securities, (b) if bid or offering prices are not available for any securities,
on the basis of the U.S. dollar equivalent (at the relevant exchange rate) of
current bid or offer prices for comparable securities, (c) by appraising the
U.S. dollar value of the Securities on the bid or offer side of the market or
(d) by any combination of the above. The relevant exchange rate used for
evaluations of the Securities will include the cost of a seven-day forward
foreign
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exchange contract in the relevant currency to correspond to the requirement that
the Trustee settle redemption requests in U.S. dollars within seven days.
EXPENSES AND CHARGES
INITIAL EXPENSES
All expenses incurred in establishing the Fund, including the cost of the
initial preparation and printing of documents relating to the Fund, cost of the
initial evaluation, initial fees and expenses of the Trustee, fees of the
Evaluator during the initial public offering, legal expenses, advertising and
selling expenses and any other out-of-pocket expenses, will be paid by the
Underwriting Account at no charge to the Fund.
FEES
An estimate of the total annual expenses of the Fund is set forth under the
Investment Summary. The Portfolio Supervision Fee is based on the face amount of
Securities in the Fund on the Initial Date of Deposit and on the first business
day of each calendar year thereafter, except that if in any calendar year
Additional Securities are deposited, the fee for the balance of the year will be
based on the face amounts on each Record Day. This fee, which is not to exceed
the maximum amount set forth under the Investment Summary, may exceed the actual
costs of providing portfolio supervisory services for this Fund, but at no time
will the total amount the Sponsors receive for portfolio supervisory services
rendered to all series of International Bond Fund in any calendar year exceed
the aggregate cost to them of supplying these services in that year. In
addition, the Sponsors may also be reimbursed for bookkeeping or other
administrative services provided to the Fund in amounts not exceeding their
costs of providing these services. The Trustee (or Co-Trustees in the case of
Investors Bank & Trust Company and The First National Bank of Chicago) receives
for its services as Trustee and for reimbursement of expenses incurred on behalf
of the Fund, payable in monthly installments, the amount per Unit set forth
under the Investment Summary as Trustees's Annual Fee and Expenses, which
includes the Evaluator's fee, the estimated Portfolio Supervision Fee, estimated
reimbursable bookkeeping or other administrative expenses paid to the Sponsors
and certain mailing and printing expenses. The Trustee also receives benefits to
the extent that it holds funds on deposit in the various non-interest bearing
accounts created under the Indenture. The foregoing fees may be adjusted for
inflation in accordance with the terms of the Indenture without approval of
Holders.
OTHER CHARGES
These include: (a) fees of the Trustee for extraordinary services (Section
8.05), (b) certain expenses of the Trustee (including legal and auditing
expenses) and of counsel designated by the Sponsors (Sections 3.04, 3.09, 8.01
and 8.05), (c) various governmental charges (Sections 3.03 and 8.01[h] ), (d)
expenses and costs of action taken to protect the Fund (Section 8.01[d]), (e)
indemnification of the Trustee for any losses, liabilities and expenses incurred
without gross negligence, bad faith or wilful misconduct on its part (Section
8.05), (f) indemnification of the Sponsors for any losses, liabilities and
expenses incurred without gross negligence, bad faith, wilful misconduct or
reckless disregard of their duties (Section 7.05[b]) and (g) expenditures
incurred in contacting Holders upon termination of the Fund (Section 9.02). The
amounts of these charges and fees are secured by a lien on the Fund and, if the
balances in the Income and Capital Accounts (see below) are insufficient, the
Trustee has the power to sell Securities to pay these amounts (Section 8.05).
ADMINISTRATION OF THE FUND
RECORDS
The Trustee keeps a register of the names, addresses and holdings of all
Holders. The Trustee also keeps records of the transactions of the Fund,
including a current list of the Securities and a copy of the Indenture, which
are available to Holders for inspection at the office of the Trustee at
reasonable times during business hours (Sections 6.01, 8.02 and 8.04).
ACCOUNTS AND DISTRIBUTIONS
Interest received is credited to an Income Account and other receipts to a
Capital Account (after conversion into U.S. dollars at the applicable rates).
The Monthly Income Distribution for each Holder as of each Record Day will be
made on the following Distribution Day or shortly thereafter and shall consist
of an amount substantially equal to the Holder's pro rata share of the estimated
U.S. dollar net income of the Fund accrued during the month preceding the Record
Day, after deducting estimated expenses and after any adjustment necessary to
reflect changes in currency exchange rates. At the same time the Trustee will
distribute that Holder's pro rata share of the distributable cash balance of the
Capital Account computed as of the close of
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business on the preceding Record Day (if at least equal to the Minimum Capital
Distribution set forth under Investment Summary). The estimated U.S. dollar
income is determined initially by assuming no fluctuations in currency exchange
rates. Distributions of interest income will be made based on currency exchange
rates in effect on each Record Day. However, since non-U.S. dollar amounts
actually received by the Fund will be converted into U.S. dollars upon receipt,
each distribution will be adjusted to reflect any difference between the actual
amount received by the Fund in U.S. dollars as to a particular Security and the
amount previously distributed to Holders with respect to that Security. The
amount of the Monthly Income Distribution will change with fluctuations in the
relevant exchange rates and as Securities mature, are exchanged, redeemed, paid
or sold and as Substitute Securities and Additional Securities are purchased.
Principal proceeds received from the disposition of any of the Securities
subsequent to a Record Day and prior to the succeeding Distribution Day which
are not used for redemption will be held in the Capital Account to be
distributed on the next succeeding Distribution Day. The first distribution for
persons who purchase Units between a Record Day and a Distribution Day will be
made on the second Distribution Day following their purchase of Units. A Reserve
Account may be created by the Trustee by withdrawing from the Income or Capital
Accounts, from time to time, those amounts as it deems requisite to establish a
reserve for any taxes or other governmental charges that may be payable out of
the Fund (Section 3.03). Funds held by the Trustee in the various accounts
created under the Indenture do not bear interest (Section 8.01).
INVESTMENT ACCUMULATION PROGRAM
Monthly Income Distributions of interest, principal and premium, if any,
received by the Fund will be paid in cash. However, a Holder may elect to have
these distributions reinvested in The Corporate Fund Accumulation Program, Inc.
(the 'Program'). The Program is an open-end management investment company whose
primary investment objective is to obtain a high level of current income through
investment in a portfolio consisting primarily of long-term debt obligations
(denominated in U.S. dollars) of corporations with credit characteristics
comparable to those of securities in this Fund. It should be noted, however,
that interest distributions to foreign Holders from the Program will be subject
to U.S. Federal income taxes, including withholding taxes. Holders participating
in the Program will be taxed on their reinvested distributions in the manner
described in Taxes even though distributions are automatically reinvested in the
Program. For more complete information about the Program, including charges and
expenses, return the enclosed form for a prospectus. Read it carefully before
you decide to participate. Notice of election to participate must be received by
the Trustee in writing at least ten days before the Record Day for the first
distribution to which such notice is to apply.
PORTFOLIO SUPERVISION
The Fund is a unit investment trust and is not an actively managed fund in
that it normally follows a buy and hold investment strategy. Traditional methods
of investment management for a managed fund (such as a mutual fund) typically
involve frequent changes in a portfolio of securities on the basis of economic,
financial and market analyses. The Portfolio of the Fund, however, will not be
actively managed and therefore adverse currency exchange rate fluctuations or
the adverse financial condition of an issuer will not necessarily require the
sale of securities from the Portfolio. Defined Asset Funds investment
professionals are dedicated exclusively to selecting and then monitoring
securities held by the various Defined Funds. On an ongoing basis, Defined Asset
Funds experienced financial analysts regularly review the Portfolios and may
direct the disposition of Securities under any of the following circumstances:
(i) a default in payment of amounts due on any Security, (ii) institution of
certain legal proceedings, (iii) any other legal question or impediment
affecting a Security or the payment of amounts due on the Security, (iv) default
under certain documents adversely affecting debt service or default in payment
of amounts due on other securities of the same issuer or guarantor, (v) decline
in projected income pledged for debt service on revenue bond issues, (vi)
decline in price of a Security or the occurrence of other market or credit
factors, including advance refunding (i.e., the issuance of refunding bonds and
the deposit of the proceeds thereof in trust or escrow to retire the refunded
Securities on their respective redemption dates), that in the opinion of the
Sponsors would make the retention of the Security detrimental to the interests
of the Holders, (vii) if a Security is not consistent with the investment
objective of the Fund or (viii) if the Trustee has a right to sell or redeem a
Security pursuant to any applicable guarantee or other credit support. If a
default in the payment of amounts due on any Security occurs and if the Sponsors
fail to instruct the Trustee to sell or hold that Security, the Indenture
provides that the Trustee, within 30 days of that failure by the Sponsors, shall
sell the Security.
The Sponsors are required to instruct the Trustee to reject any offer made
by an issuer of any of the Debt Obligations to issue new Debt Obligations in
exchange or substitution for any Debt Obligations pursuant to a
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refunding or refinancing plan, except that the Sponsors may instruct the Trustee
to accept or reject any offer to take any other action with respect thereto as
the Sponsors may deem proper if (a) the issuer is in default with respect to
these Debt Obligations or (b) in the written opinion of the Sponsors the issuer
will probably default with respect to these Debt Obligations in the reasonably
foreseeable future. Any Debt Obligations so received in exchange or substitution
will be held by the Trustee subject to the terms and conditions of the Indenture
to the same extent as Debt Obligations originally deposited thereunder. Within
five days after the deposit of Debt Obligations in exchange or substitution for
underlying Debt Obligations, the Trustee is required to give notice thereof to
each Holder, identifying the Debt Obligations removed from the Portfolio and the
Debt Obligations substituted therefor (Section 3.08).
The Sponsors are also authorized to direct the Trustee to deposit
replacement securities ('Replacement Securities') into the portfolio to replace
any Failed Debt Obligations or, in connection with the deposit of Additional
Securities when Securities of an issue originally deposited are unavailable at
the time of subsequent deposit as described more fully below. Replacement
Securities that are replacing Failed Debt Obligations will be deposited into the
Trust Fund within 110 days of the date of deposit of the contracts that have
failed at a purchase price that does not exceed the amount of funds reserved for
the purchase of the Failed Debt Obligations and that results in a yield to
maturity and in a current return, in each case as of that date of deposit, that
are equivalent (taking into consideration then current market conditions and the
relative creditworthiness of the underlying obligation) to the yield to maturity
and current return of the Failed Debt Obligations. The Replacement Securities
shall be corporate bonds, debentures, notes or other straight debt obligations
without equity or other conversion features, with fixed maturity dates
substantially the same as those of the Failed Debt Obligations, having no
warrants or subscription privileges attached; shall be payable in Australian or
Canadian dollars; shall not be when, as and if issued obligations; shall not be
subject to foreign withholding taxes; shall be issued after July 18, 1984, if
interest thereon is United States source income; and shall have, in the opinion
of the Sponsors, credit characteristics comparable to securities which have been
rated in the category AA or better by a recognized rating service.
The Indenture also requires that the purchase of the Replacement Securities
will not (i) result in more than 10% of the Fund consisting of securities of a
single issuer (or of two or more issuers which are Affiliated Persons as this
term is defined in the Investment Company Act of 1940) which are not registered
and are not being registered under the Securities Act of 1933 or (ii) result in
the Fund owning more than 50% of any single issue which has been registered
under the Securities Act of 1933 (Section 3.10). The Replacement Securities
shall be selected by the Sponsors from a list of Securities maintained by them
and updated from time to time. The Securities on the current list from which
Replacement Securities are to be selected are set forth under the Investment
Summary.
Whenever a Replacement Security has been acquired for the Fund, the Trustee
shall, on the next monthly distribution date that is more than 30 days
thereafter, make a pro rata distribution of the amount, if any, by which the
cost to the Fund of the Failed Debt Obligation exceeded the cost of the
Replacement Security plus accrued interest. If Replacement Securities are not
acquired, the Sponsors shall, on or before the next following Distribution Day,
cause to be refunded the attributable sales charge, plus the attributable Cost
of Securities to Fund listed under Portfolio, plus undistributed income
attributable to the failed Security.
The Indenture also authorizes the Sponsors to increase the size and number
of Units of the Fund by the deposit of Additional Securities, contracts to
purchase Additional Securities or cash or a letter of credit with instructions
to purchase Additional Securities in exchange for the corresponding number of
additional Units during the 90-day period subsequent to the Initial Date of
Deposit, provided that the original proportionate relationship among the face
amounts of each Security established on the Initial Date of Deposit (the
'Original Proportionate Relationship') is maintained to the extent practicable.
Deposits of Additional Securities subsequent to the 90-day period following the
Initial Date of Deposit must replicate exactly the original proportionate
relationship among the face amounts of Securities comprising the Portfolio at
the end of the initial 90-day period, subject to certain events.
With respect to deposits of Additional Securities (or cash or a letter of
credit with instructions to purchase Additional Securities), in connection with
creating additional Units of the Fund during the 90-day period following the
Initial Date of Deposit, the Sponsors may specify minimum face amounts in which
Additional Securities will be deposited or purchased. If a deposit is not
sufficient to acquire minimum amounts of each Security, Additional Securities
may be acquired in the order of the Security most under-represented immediately
before the deposit when compared to the Original Proportionate Relationship. If
Securities of an issue originally deposited are unavailable at the time of
subsequent deposit or cannot be purchased at
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reasonable prices or their purchase is prohibited or restricted by law,
regulation or policies applicable to the Fund or any of the Sponsors, the
Sponsors may (1) deposit cash or a letter of credit with instructions to
purchase the Security when it becomes available (provided that it becomes
available within 110 days after the Initial Date of Deposit) or (2) deposit (or
instruct the Trustee to purchase) either (i) Securities of one or more other
issues originally deposited or (ii) a Replacement Security which will meet the
conditions described above, except that it must have a rating at least equal to
that of the Security it replaces (or, in the opinion of the Sponsors, have
comparable credit characteristics, if not rated). Any funds held to acquire
Additional or Replacement Securities which have not been used to purchase
Securities at the end of the 90-day period beginning with the Initial Date of
Deposit, shall be used to purchase Securities as described above or shall be
distributed to Holders together with the attributable sales charge.
REPORTS TO HOLDERS
With each distribution the Trustee will furnish Holders a statement of the
amounts of interest and the amounts of other receipts, if any, which are being
distributed, expressed in each case as a U.S. dollar amount per Unit. After the
end of each calendar year during which a Monthly Income Distribution was made to
Holders, the Trustee will furnish to each person who at any time during the
calendar year was a Holder of record, a statement (i) summarizing transactions
for that calendar year in the Income and Capital Accounts, (ii) identifying
Securities sold and purchased during the year and listing Securities held and
the number of Units outstanding at the end of that calendar year, (iii) stating
the Redemption Price per Unit based upon the computation thereof made at the end
of that calendar year and (iv) specifying the amounts distributed during that
year from the Income and Capital Accounts. The accounts of the Fund shall be
audited at least annually by independent certified public accountants designated
by the Sponsors and the report of such accountants shall be furnished by the
Trustee to Holders upon request.
In order to enable them to comply with Federal and state tax reporting
requirements, Holders will be furnished upon request to the Trustee with
evaluations of Securities furnished to it by the Evaluator.
CERTIFICATES
Certain of the Sponsors may collect additional charges for registering and
shipping certificates to purchasers. These Certificates are transferable or
interchangeable upon presentation at the office of the Trustee, with a payment
of $2.00 if required by the Trustee (or other amounts specified by the Trustee
and approved by the Sponsors) for each new Certificate and any sums payable for
taxes or other governmental charges imposed upon the transaction (Section 6.01)
and compliance with the formalities necessary to redeem Certificates (see
Redemption). Mutilated, destroyed, stolen or lost Certificates will be replaced
upon delivery of satisfactory indemnity and payment of expenses incurred
(Section 6.02).
AMENDMENT AND TERMINATION
The Sponsors and the Trustee may amend the Indenture, without the consent
of the Holders, (a) to cure any ambiguity or to correct or supplement any
provision thereof which may be defective or inconsistent, (b) to change any
provision thereof as may be required by the SEC or any successor governmental
agency or (c) to make any other provisions which do not materially adversely
affect the interest of the Holders (as determined in good faith by the
Sponsors). The Indenture may also be amended in any respect by the Sponsors and
the Trustee, or any of the provisions thereof may be waived, with the consent of
the Holders of 51% of the Units, provided that none of these amendments or
waivers will reduce the interest in the Fund of any Holder without the consent
of the Holder or reduce the percentage of Units required to consent to any of
these amendments or waivers without the consent of all Holders (Section 10.01).
The Fund will terminate and be liquidated upon the maturity, sale,
redemption or other disposition of the last Security held thereunder but in no
event is it to continue beyond the mandatory termination date set forth under
the Investment Summary. The Fund may be terminated by the Sponsors if the value
of the Fund is less than the minimum value set forth under the Investment
Summary, and may be terminated at any time by written instrument executed by the
Sponsors and consented to by Holders of 51% of the Units. The Trustee will
deliver written notice of any termination to each Holder within a reasonable
period of time prior to the termination, specifying the times at which the
Holders may surrender their Certificates for cancellation. Within a reasonable
period of time after the termination, the Trustee must sell all of the
Securities then held and distribute to each Holder, upon surrender for
cancellation of his Certificates and after deductions for accrued but unpaid
fees, taxes and governmental and other charges, that Holder's interest in the
Income and Capital Accounts. This distribution will normally be made by mailing
a check in the amount of each Holder's interest in these accounts to the address
of that Holder appearing on the record books of the Trustee.
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RESIGNATION, REMOVAL AND LIMITATIONS ON LIABILITY
THE TRUSTEE
The Trustee or any successor may resign upon notice to the Sponsors. The
Trustee may be removed upon the direction of the Holders of 51% of the Units at
any time or by the Sponsors without the consent of any of the Holders if the
Trustee becomes incapable of acting or becomes bankrupt or its affairs are taken
over by public authorities or if for any reason the Sponsors determine in good
faith that the replacement of the Trustee is in the best interests of Holders.
This resignation or removal shall become effective upon the acceptance of
appointment by the successor which may, in the case of a resigning or removed
Co-Trustee, be one or more of the remaining Co-Trustees. In case of resignation
or removal the Sponsors are to use their best efforts to appoint a successor
promptly and if upon resignation of the Trustee no successor has accepted
appointment within thirty days after notification, the Trustee may apply to a
court of competent jurisdiction for the appointment of a successor. The Trustee
shall be under no liability for any action taken in good faith in reliance on
prima facie properly executed documents or for the disposition of monies or
Securities under the Indenture. This provision, however, shall not protect the
Trustee in cases of wilful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties. In the event of the failure of the
Sponsors to act, the Trustee may act under the Indenture and shall not be liable
for any of these actions taken in good faith. The Trustee shall not be
personally liable for any taxes or other governmental charges imposed upon or in
respect of the Securities or upon the interest thereon. In addition, the
Indenture contains other customary provisions limiting the liability of the
Trustee.
THE EVALUATOR
The Evaluator may resign or may be removed, effective upon the acceptance
of appointment by its successor, by the Sponsors, who are to use their best
efforts to appoint a successor promptly. If upon resignation of the Evaluator no
successor has accepted appointment within thirty days after notification, the
Evaluator may apply to a court of competent jurisdiction for the appointment of
a successor. Determinations by the Evaluator under the Indenture shall be made
in good faith upon the basis of the best information available to it; provided,
however, that the Evaluator shall be under no liability to the Trustee, the
Sponsors or the Holders for errors in judgment. This provision, however, shall
not protect the Evaluator in cases of wilful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties. The Trustee, the
Sponsors and the Holders may rely on any evaluation furnished by the Evaluator
and shall have no responsibility for the accuracy thereof.
THE SPONSORS
Any Sponsor may resign if one remaining Sponsor maintains a net worth of
$2,000,000 and is agreeable to the resignation. A new Sponsor may be appointed
by the remaining Sponsors and the Trustee to assume the duties of the resigning
Sponsor. If there is only one Sponsor and it shall fail to perform its duties or
becomes incapable of acting or becomes bankrupt or its affairs are taken over by
public authorities, then the Trustee may (a) appoint a successor Sponsor at
rates of compensation deemed by the Trustee to be reasonable and as may not
exceed amounts prescribed by the SEC, or (b) terminate the Indenture and
liquidate the Fund or (c) continue to act as Trustee without terminating the
Indenture. The Agent for the Sponsors has been appointed by the other Sponsors
as agent for purposes of taking action under the Indenture. If the Sponsors are
unable to agree with respect to action to be taken jointly by them under the
Indenture and they cannot agree as to which Sponsor shall continue to act as
sole Sponsor, then the Agent for the Sponsor shall continue to act as sole
Sponsor. If one of the Sponsors fails to perform its duties or becomes incapable
of acting or becomes bankrupt or its affairs are taken over by public
authorities, then that Sponsor is automatically discharged and the other
Sponsors shall act as sole Sponsors. The Sponsors shall be under no liability to
the Fund or to the Holders for taking any action or for refraining from taking
any action in good faith or for errors in judgment and shall not be liable or
responsible in any way for depreciation or loss incurred by reason of the sale
of any Security. This provision, however, shall not protect the Sponsors in
cases of wilful misfeasance, bad faith, gross negligence or reckless disregard
of their obligations and duties. The Sponsors and their successors are jointly
and severally liable under the Indenture. A Sponsor may transfer all or
substantially all of its assets to a corporation or partnership which carries on
its business and duly assumes all of its obligations under the Indenture and in
that event it shall be relieved of all further liability under the Indenture.
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MISCELLANEOUS
TRUSTEE
The Trustee of the Fund is named on the back cover page of this Prospectus
and is either The Chase Manhattan Bank, N.A., a national banking association
with its Unit Trust Department at 2 Chase Manhattan Plaza, 13th Floor, New York,
New York 10081 (which is subject to supervision by the Comptroller of the
Currency, the Federal Deposit Insurance Corporation ('FDIC') and the Board of
Governors of the Federal Reserve System ('Federal Reserve')); Bankers Trust
Company, a New York banking corporation with its corporate trust office at 4
Albany Street, New York, New York 10015 (which is subject to supervision by the
New York Superintendent of Banks, the FDIC and the Federal Reserve); or (acting
as Co-Trustees) Investors Bank & Trust Company, a Massachusetts trust company
with its unit investment trust servicing group at One Lincoln Plaza, Boston,
Massachusetts 02111 (which is subject to supervision by the Massachusetts
Commissioner of Banks, the FDIC and the Federal Reserve) and The First National
Bank of Chicago, a national banking association with its corporate trust office
at One First National Plaza, Suite 0126, Chicago, Illinois 60670-0126 (which is
subject to supervision by the Comptroller of the Currency, the FDIC and the
Federal Reserve).
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsors. Hawkins, Delafield & Wood, 67 Wall Street, New York, New York 10005,
act as counsel for Bankers Trust Company, as Trustee. Bingham, Dana & Gould, 150
Federal Street, Boston, Massachusetts 02110, act as counsel for The First
National Bank of Chicago and Investors Bank & Trust Company, as Co-Trustees.
AUDITORS
The Statement of Condition, including the Portfolio of the Fund included
herein, has been audited by Deloitte & Touche, independent accountants, as
stated in their opinion appearing herein, and has been so included in reliance
upon that opinion given on the authority of that firm as experts in accounting
and auditing.
SPONSORS
Each Sponsor is a Delaware corporation and is engaged in the underwriting,
securities and commodities brokerage business, and is a member of the New York
Stock Exchange, Inc., other major securities exchanges and commodity exchanges,
and the National Association of Securities Dealers, Inc. Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Merrill Lynch Asset Management, Inc., a Delaware
corporation and subsidiary of Merrill Lynch & Co., Inc., the parent of Merrill
Lynch, Pierce, Fenner & Smith Incorporated, are engaged in the investment
advisory business. Smith Barney Inc., an investment banking and securities
broker-dealer firm, is an indirect wholly owned subsidiary of The Travelers Inc.
Prudential Securities Incorporated, a wholly-owned subsidiary of Prudential
Securities Group Inc. and an indirect wholly-owned subsidiary of the Prudential
Insurance Company of America, is engaged in the investment advisory business.
PaineWebber Incorporated is engaged in the investment advisory business and is a
wholly-owned subsidiary of PaineWebber Group Inc. Dean Witter Reynolds Inc., a
principal operating subsidiary of Dean Witter, Discover and Co., is engaged in
the investment advisory business. Each Sponsor, or one of its predecessor
corporations, has acted as Sponsor of a number of series of unit investment
trusts.
Each Sponsor has acted as principal underwriter and managing underwriter of
other investment companies. The Sponsors, in addition to participating as
members of various selling groups or as agents of other investment companies,
execute orders on behalf of investment companies for the purchase and sale of
securities of these companies and sell securities to these companies in their
capacities as brokers or dealers in securities.
Each Sponsor (or a predecessor) has acted as Sponsor of various series of
Defined Asset Funds. A subsidiary of Merrill Lynch, Pierce, Fenner & Smith
Incorporated succeeded in 1970 to the business of Goodbody & Co., which had been
a co-Sponsor of Defined Asset Funds since 1964. That subsidiary resigned as
Sponsor of each of the Goodbody series in 1971. Merrill Lynch, Pierce, Fenner &
Smith Incorporated has been co-Sponsor and the Agent for the Sponsors of each
series of Defined Asset Funds created since 1971. Shearson Lehman Brothers Inc.
('Shearson') and certain of its predecessors have been underwriters beginning in
1962 and co-Sponsors from 1965 to 1967 and from 1980 to 1993 of various Defined
Asset Funds. As a result of the acquisition of certain of Shearson's assets by
Smith Barney, Harris Upham & Co. Incorporated and Primerica Corporation (now The
Travelers Inc.), Smith Barney Inc. now serves as co-Sponsor of various Defined
Asset Funds. Prudential Securities Incorporated and its predecessors have been
underwriters of Defined Asset Funds since 1961 and co-Sponsors since 1964, in
which year its predecessor became successor co-Sponsor to the
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original Sponsor. Dean Witter Reynolds, Inc. and its predecessors have been
underwriters of various Defined Asset Funds since 1964 and co-Sponsors since
1974. PaineWebber Incorporated and its predecessor have co-Sponsored certain
Defined Asset Funds since 1983.
The Sponsors have maintained secondary markets in Defined Asset Funds for
over 20 years. For decades informed investors have purchased unit investment
trusts for dependability and professional selection of investments. Defined
Asset Funds offers an array of investment choices, suited to fit a wide variety
of personal financial goals--a buy and hold strategy for capital accumulation,
such as for children's education or a nest egg for retirement, or attractive,
regular current income consistent with relative protection of capital. There are
Defined Funds to meet the needs of just about any investor. Unit investment
trusts are particularly suited for the many investors who prefer to seek
long-term profits by purchasing sound investments and holding them, rather than
through active trading. Few individuals have the knowledge, resources or capital
to buy and hold a diversified portfolio on their own; it would generally take a
considerable sum of money to obtain comparable breadth and diversity. Sometimes
it takes a combination of Defined Funds to plan for your objectives.
One of your most important investment decisions may be how you divide your
money amoung asset classes. Spreading your money among different kinds of
investments can balance the risks and rewards of each one. Most investment
experts recommend stocks for long-term capital growth. For attractive income
consider long-term corporate bonds. By purchasing both defined equity and
defined bond funds, investors can receive attractive current income and growth
potential, offering some protection against inflation.
The following chart shows the average annual compounded rate of return of
selected asset classes over the 10-year and 20-year periods ending December 31,
1993, compared to the rate of inflation over the same periods. Of course, this
chart represents past performance of these investment categories and is no
guarantee of future results, either of these categories or of Defined Funds.
Defined Funds also have sales charges and expenses, which are not reflected in
this chart.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stocks (S&P 500)
20 yr. 12.76%
10 yr. 14.94%
Small-company stocks
20 yr. 18.82%
10 yr. 9.96%
Long-term corporate bonds
20 yr. 10.16%
10 yr. 14.00%
U.S. Treasury bills (short-term)
20 yr. 7.49%
10 yr. 6.35%
Consumer Price Index
20 yr. 5.92%
10 yr. 3.73%
0 2 4 6 8 10 12 14 16 18 20 %
</TABLE>
Source: Ibbotson Associates (Chicago)
Used with permission. All rights reserved.
Instead of having to select individual securities on their own, purchasers
of Defined Funds benefit from the expertise of Defined Asset Funds' experienced
buyers and research analysts. In addition, they gain the advantage of
diversification by investing in units of a Defined Fund holding securities of
several different
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issuers. Such diversification can reduce risk, but it does not eliminate it.
While the portfolio of a managed fund, such as a mutual fund, continually
changes, defined bond funds offer a defined portfolio and a schedule of income
distributions identified in the prospectus. Investors know, generally, when they
buy, the issuers, maturities, call dates and ratings of the securities in the
portfolio. Of course, the portfolio may change somewhat over time as additional
securities are deposited, as securities mature or are called or redeemed or as
they are sold to meet redemptions and in certain other limited circumstances.
Investors also know at the time of purchase their estimated income and current
and long-term returns, subject to credit and market risks and to changes in the
portfolio or the funds expenses.
Defined Asset Funds offers a variety of fund types. The tax exemption for
municipal bonds, which makes them attractive to high-bracket taxpayers, is
offered by Defined Municipal Investment Trust Funds. Municipal Defined Funds
offer a simple and convenient way for an investor to earn monthly income free
from Federal income tax. Defined Municipal Investment Trust Funds have provided
investors with tax-free income for more than 30 years. Defined Corporate Income
Funds, with higher current returns than municipal or government funds, are
suitable for Individual Retirement Accounts and other tax-advantaged accounts
and offer investors a simple and convenient way to earn monthly income. Defined
Government Securities Income Funds offer investors a simple and convenient way
to participate in markets for Government securities while earning an attractive
current return. Defined International Bond Funds, invested in bonds payable in
foreign currencies, offer the potential to profit from changes in currency
values and possibly from interest rates higher than paid on comparable US bonds,
but investors incur a higher risk for these potentially greater returns.
Historically, stocks have offered a potential for growth of capital, and thus
some protection against inflation, over the long term. Defined Equity Income
Funds offer participation in the stock market providing current income as well
as the possibility of capital appreciation. The S&P Index Trusts offer a
convenient and inexpensive way to participate in broad market movements. Concept
Series seek to capitalize on selected anticipated economic, political or
business trends. Utility Stock Series, consisting of stocks of issuers with
established reputations for regular cash dividends, seek to benefit from
dividend increases. Select 10 Portfolios seek total return by investing for one
year in the ten highest yielding stocks on a designated stock index.
DESCRIPTION OF RATINGS (as described by the rating companies themselves)
STANDARD & POOR'S RATINGS GROUP, A DIVISION OF MCGRAW HILL, INC.
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay
principal, and differs from the highest rated issues only in small degree.
MOODY'S INVESTORS SERVICE, INC.:
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
'gilt edge'. Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
FITCH INVESTORS SERVICE, INC.:
AAA rated bonds are considered to be investment grade and of the highest
quality. The obligor has an extraordinary ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA rated bonds are considered to be investment grade and of high quality.
The obligor's ability to pay interest and repay principal, while very strong, is
somewhat less than for AAA rated securities or more subject to possible change
over the term of the issue.
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EXCHANGE OPTION
ELECTION
Holders may elect to exchange any or all of their Units of this Series for
units of one or more of the series of Funds listed in the table set forth below
(the 'Exchange Funds'), which normally are sold in the secondary market at
prices which include the sales charges indicated in the table. Certain series of
the Funds listed have lower maximum applicable sales charges than those stated
in the table; also the rates of sales charges may be changed from time to time.
No series with a maximum applicable sales charge of less than 3.50% of the
public offering price is eligible to be acquired under the Exchange Option, with
the following exceptions: (1) Freddie Mac Series may be acquired by exchange
during the initial offering period from any of the Exchange Funds listed in the
table and (2) Units of any Select Ten Portfolio, if available, may be acquired
during their initial offering period by exchange from any Exchange Fund Series;
units of Select Ten Portfolios may be exchanged only for units of another Select
Ten Series, if available. Units of the Exchange Funds may be acquired at prices
which include the reduced sales charges for Exchange Fund units listed in the
table, subject, however, to these important limitations:
First, there must be a secondary market maintained by the Sponsors in
units of the series being exchanged and a primary or secondary market in
units of the series being acquired and there must be units of the
applicable Exchange Fund lawfully available for sale in the state in which
the Holder is resident. There is no legal obligation on the part of the
Sponsors to maintain a market for any units or to maintain the legal
qualification for sale of any of these units in any state or states.
Therefore, there is no assurance that a market for units will in fact exist
or that any units will be lawfully available for sale on any given date at
which a Holder wishes to sell his Units of this Series and thus there is no
assurance that the Exchange Option will be available to any Holder.
Second, when units held for less than five months are exchanged for
units with a higher regular sales charge, the sales charge will be the
greater of (a) the reduced sales charge set forth in the table below or (b)
the difference between the sales charge paid in acquiring the units being
exchanged and the regular sales charge for the quantity of units being
acquired, determined as of the date of the exchange.
Third, exchanges will be effected in whole units only. If the proceeds
from the Units being surrendered are less than the cost of a whole number
of units being acquired, the exchanging Holder will be permitted to add
cash in an amount to round up to the next highest number of whole units.
Fourth, the Sponsors reserve the right to modify, suspend or terminate
the Exchange Option at any time without further notice to Holders. In the
event the Exchange Option is not available to a Holder at the time he
wishes to exercise it, the Holder will be immediately notified and no
action will be taken with respect to his Units without further instruction
from the Holder.
PROCEDURES
To exercise the Exchange Option, a Holder should notify one of the Sponsors
of his desire to use the proceeds from the sale of his Units of this Series to
purchase units of one or more of the Exchange Funds. If units of the applicable
outstanding series of the Exchange Fund are at that time available for sale, the
Holder may select the series or group of series for which he desires his Units
to be exchanged. Of course, the Holder will be provided with a current
prospectus or prospectuses relating to each series in which he indicates
interest. The exchange transaction will generally operate in a manner
essentially identical to any secondary market transaction, i.e., Units will be
repurchased at a price equal to the aggregate bid side evaluation per Unit of
the Securities in the Portfolio plus accrued interest. Units of the Exchange
Fund will be sold to the Holder at a price equal to the bid side evaluation per
unit of the underlying securities in the Portfolio plus interest plus the
applicable sales charge listed in the table below. Units of this Series acquired
during the initial public offering period will be sold at a price based on the
offering side evaluation of the underlying Securities. Units of Equity Income
Fund are sold, and will be repurchased, at a price normally based on the closing
sale prices on the New York Stock Exchange, Inc. of the underlying securities in
the Portfolio. The maximum applicable sales charges for units of the Exchange
Funds are also listed in the table below. Excess proceeds not used to acquire
whole Exchange Fund units will be paid to the exchanging Holder.
CONVERSION OPTION
Owners of units of any registered unit investment trust sponsored by others
which was initially offered at a maximum applicable sales charge of at least
3.0% ('Conversion Trust') may elect to apply the cash proceeds of sale or
redemption of those units directly to acquire available units of any Exchange
Fund at the reduced sales
25
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charge, subject to the terms and conditions applicable to the Exchange Option
(except that no secondary market is required in Conversion Trust units). To
exercise this option, the owner should notify his retail broker. He will be
given a prospectus of each series in which he indicates interest of which units
are available. The broker must sell or redeem the units of the Conversion Trust.
Any broker other than a Sponsor must certify to the Sponsors that the purchase
of units of the Exchange Fund is being made pursuant to and is eligible for this
conversion option. The broker will be entitled to two-thirds of the applicable
reduced sales charge. The Sponsors reserve the right to modify, suspend or
terminate the conversion option at any time without further notice, including
the right to increase the reduced sales charge applicable to this option (but
not in excess of $5 more per unit than the corresponding fee then charged for
the Exchange Option).
THE EXCHANGE FUNDS
The return from taxable fixed income securities is normally higher than
that available from tax-exempt fixed income securities. Certain of the Exchange
Funds do not provide for periodic payments of interest and are best suited for
purchase by IRA's, Keogh Plans, pension funds or other tax-deferred retirement
plans. Consequently, some of the Exchange Funds may be inappropriate investments
for some Holders and therefore may be inappropriate exchanges for Units of this
Series. The table below indicates certain characteristics of each of the
Exchange Funds which a Holder should consider in determining whether each
Exchange Fund would be an appropriate investment vehicle and an appropriate
exchange for Units of this Series.
TAX CONSEQUENCES
An exchange of Units pursuant to the Exchange or Conversion Option for
units of a series of another Fund should constitute a 'taxable event' under the
Code, requiring a Holder to recognize a tax gain or loss, subject to the
following limitation discussed below. The Internal Revenue Service may seek to
disallow a loss (or pro rata portion thereof) on an exchange of units if the
units received by a Holder in connection with such an exchange represent
securities that are not materially different from the securities that his
previous units represented (e.g., both Funds contain securities issued by the
same obligor that have the same material terms). Holders are urged to consult
their own tax advisers as to the tax consequences to them of exchanging units in
particular cases.
EXAMPLE
Assume that a Holder, who has three units of a fund with a 5.50% sales
charge in the secondary market and a current price (based on bid side evaluation
plus accrued interest) of $1,100 per unit, sells his units and exchanges the
proceeds for units of a series of an Exchange Fund with a current price of $950
per unit and the same sales charge. The proceeds from the Holder's units will
aggregate $3,300. Since only whole units of an Exchange Fund may be purchased,
the Holder would be able to acquire four units in the Exchange Fund for a total
cost of $3,860 ($3,800 for units and $60 for the $15 per unit sales charge) by
adding an extra $560 in cash. Were the Holder to acquire the same number of
units at the same time in the regular secondary market maintained by the
Sponsors, the price would be $4,021.16 ($3,800 for the units and $221.16 for the
5.50% sales charge).
26
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<TABLE>
<CAPTION>
REDUCED
MAXIMUM SALES CHARGE
NAME OF APPLICABLE FOR SECONDARY INVESTMENT
EXCHANGE FUND SALES CHARGE* MARKET** CHARACTERISTICS
<S> <C> <C> <C>
THE EQUITY INCOME FUND
Utility Common Stock Series 4.50% $15 per 1,000 units dividends, taxable income, underlying
securities are common stocks of
public utilities
Select Ten Portfolios (domestic and 2.75% $17.50 per 1,000 units underlying securities represent 10 of
international) the stocks on a designated stock
index with highest dividend yield as
of date of creation of fund
Concept Series 4.00% $15 per 100 units underlying securities constitute a
professionally selected portfolio of
common stocks consistent with an
investment idea or concept
THE GOVERNMENT SECURITIES
INCOME FUND
GNMA Series (other than those below) 4.25% $15 per unit long-term, fixed rate, taxable
income, underlying securities backed
by the full faith and credit of the
United States
GNMA Series E or other GNMA Series having 4.25% $15 per 1,000 units long-term, fixed rate, taxable
units with an initial face value of $1.00 income, underlying securities backed
by the full faith and credit of the
United States, appropriate for IRA's
or tax-deferred retirement plans
Freddie Mac Series 3.50% $15 per 1,000 units intermediate term, fixed rate,
taxable income, underlying securities
are backed by Federal Home Loan
Mortgage Corporation but not by U.S.
Government
MUNICIPAL INCOME FUND
Insured Discount Series 5.50% $15 per unit long-term, fixed rate, insured, tax-
exempt income, taxable capital gains
THE INTERNATIONAL BOND FUND
Multi-Currency Series 5.50% $15 per unit intermediate-term, fixed rate,
payable in foreign currencies,
taxable income
Australian and New Zealand Dollar Bonds 3.75% $15 per unit intermediate-term, fixed rate,
Series payable in Australian and New Zealand
dollars, taxable income
Australian Dollar Bonds Series 3.75% $15 per unit intermediate-term, fixed rate,
payable in Australian dollars,
taxable income
Canadian Dollar Bonds Series 3.75% $15 per unit short intermediate term, fixed rate,
payable in Canadian dollars, taxable
income
THE CORPORATE INCOME FUND
Monthly Payment Series 5.50% $15 per unit long-term, fixed rate, taxable income
Intermediate Term Series 4.75% $15 per unit intermediate-term, fixed rate,
taxable income
Cash or Accretion Bond Series and SELECT 3.50% $15 per 1,000 units intermediate-term, fixed rate,
Series underlying securities composed of
compound interest obligations secured
by collateral, taxable income,
appropriate for IRA's or tax-deferred
retirement plans
Select High Yield Series 5.50% $15 per unit non-investment grade, intermediate
and long term, fixed rate, taxable
income
Insured Series 5.50% $15 per unit long-term, fixed rate, taxable
income, underlying securities are
insured
MUNICIPAL INVESTMENT TRUST FUND
Monthly Payment, State and Multistate 5.50% $15 per unit long-term, fixed rate, tax-exempt
Series income
Intermediate Term Series 4.50% $15 per unit intermediate-term, fixed rate, tax-
exempt income
Insured Series 5.50% $15 per unit long-term, fixed rate, tax-exempt
income, underlying securities insured
by insurance companies
AMT Monthly Payment Series 5.50% $15 per unit long-term, fixed rate, income exempt
from regular federal income tax but
partially subject to AMT
</TABLE>
- ----------------------
* As described in the prospectuses relating to certain Exchange Funds, this
sales charge for secondary market sales may be reduced on a graduated scale
in the case of quantity purchases.
** The reduced sales charge for Units acquired during their initial offering
period is: $20 per unit for Series for which the Reduced Sales Charge for
Secondary Market is $15 per unit; $20 per 100 units for Series which the
Reduced Sales Charge for Secondary market is $15 per 100 units; $20 per 1,000
units for Series for which the Reduced Sales Charge for Secondary Market is
$15 per 1,000 units.
The reduced sales charge for the Sixth Utility Common Stock Series of The
Equity Income Fund is $15 per 2,000 units and for prior Utility Common Stock
Series is $7.50 per unit.
Subject to reduction depending on the maturities of the underlying Securities.
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Defined
Asset Funds
14879-7/94
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<TABLE>
<S> <C>
Sponsors: International Bond Fund
Merrill Lynch, Multi-Currency
Pierce, Fenner & Series--28 (Canadian and Australian
Smith Inc. Dollar Bonds
Unit Investment
Trusts
P.O. Box 9051
Princeton, NJ
08543-9051
(609) 282-8500
Prospectus
Smith Barney Inc. This Prospectus does not contain all of the information
Unit Trust with respect to the investment company set forth in its
Department registration statement and exhibits relating thereto
Two World Trade which have been filed with the Securities and Exchange
Center Commission, Washington, D.C. under the Securities Act of
101st Floor 1933 and the Investment Company Act of 1940, and to which
New York, NY 10048 reference is hereby
1-800-298-UNIT
PaineWebber made.
Incorporated
1200 Harbor Blvd.
Weehawken, NJ 07087
(201) 902-3000 No person is authorized to give any information or to
make any representations with respect to this investment
company
Prudential not contained in this Prospectus; and any information or
Securities representation not contained herein must not be relied
Incorporated upon as having been authorized. This Prospectus does not
One Seaport Plaza constitute an offer to sell, or a solicitation of an
199 Water Street offer to buy, securities in any state to any person to
New York, NY 10292 whom it is not lawful to make such offer in such state.
(212) 776-1000
Dean Witter Reynolds
Inc.
Two World Trade
Center
59th Floor
New York, NY 10048
(212) 392-2222
Evaluator:
Interactive Data
Services, Inc.
14 Wall Street
New York, NY 10005
Independent
Accountants:
Deloitte & Touche
1633 Broadway
New York, NY 10019
Trustee:
The Chase Manhattan
Bank, N.A.
Unit Trust
Department
Box 2051
New York, N.Y. 10081
1-800-323-1508
</TABLE>
14879-7/94
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